OTC: Peak Everything

At the 2008 Offshore Technology Conference, just about everything in the oil business was operating at its peak. Not only were oil and gas prices on their way to records, the industry faced perhaps its sharpest ever global labor and equipment shortage, which in turn brought record costs for virtually everything.
At this year’s show, “we have basically a whole new wave of peaks,” said Matt Simmons, chairman of Houston-based investment bank Simmons and Co. International and a leading voice of the so-called “peak oil” movement. The stock market is down sharply since last year at this time, along with commodity prices, demand for energy and equipment.
In addition, about 40,000 oil and gas industry jobs have been lost in the past four months, more than those added in the boom era between 2006 and 2008, he said during an OTC luncheon speech today.
But he rejects the idea that the most recent oil boom was a bubble that was bound to burst. Despite the downturn, the world still faces a long-term situation of rising global oil demand amid flat or declining oil production, a condition that is sure to drive prices higher again.
“In my opinion, $150 oil was still remarkably cheap,” he said, equating the price to 30 cents for a cup of coffee.
He said the situation will get worse in coming years unless the world begins using far less oil. Among his suggestions for doing so in the U.S.: Convince companies to allow employees to work from home, eliminating long-distance commuting; grow food locally, cutting fuel usage from global food trade; manufacture goods closer to consuming markets; and create a new fleet of fuel-efficient marine vessels to ship goods and people across the country, taking thousands of heavy trucks and passenger cars off the roads.
“It’s time for a wake up call,” he said.
–Brett Clanton