Titled “Twilight for Oil?” in the Jan 2 print edition, and An Unapologetic Alarmist online (needs subscription), Sandra Ward interviews Matthew Simmons, head of energy investrment banking firm Simmons & Co. Barrons’ cover subhead — “Preparing for (gulp!) $200 oil” — about sums it up.
But oil supply isn’t going to grow. As we move into the brutal brunt of the winter, we could easily have 45-to-60 days where demand is basically two-to-four million barrles a day higher than supply. Then we will test how robust our inventories are, because we’ve never experienced that kind of stock draw before. In the United States, in some areas we must be down to hours of spare inventory on a days-use basis, particularly in diesel fuel. When 85% of the things we buy in WalMart come from China, the implications for trucks on the highway system is profound. Those trucks are chugging along at three-to-six miles per gallon, which is why we are setting an all time record in the use of diesel fuel.
Let’s actually assume there is a reasonable chance this awful peak oil and peak natural gas is real and do something about it, so if it turns out to be real it isn’t a show stopper and if we did something and it turns out it wasn’t real, we’ve bought ourselves an insurance policy.
He goes on to call for a “the intensity of the way we tackled the Marshall plan when we rebuilt Japan and Europe after Word War II,” cutting oil use in half by 2020…. [making] a major shift in the way we distribute goods over long distance.” CAFE standards. Telecommuting. Yipes – the guy’s actually a locavore! “To have food taste great it has to be grown locally.”
But seriously, folks: this is important, and notable, that serious players from the world of big oil are starting to pay heed, recalibrate how they view the landscape of risk and opportunity, and get those contingency plans into gear.
If you’re not up on just how quickly this shift is happening — notwithstanding the macro trends heading us right into big trouble — be sure to track CLEANWATCH, the monthly newsletter on “clean technology” from Clean Edge. (Disclosure: co-founder Ron Pernick is on Natural Logic‘s advisory board; co-founder Joel Makower is a collaborator in the S/BAR sustainable business rating system and other endeavors.) CLEANWATCH is chock full of stories about growth in renewable energy markets, advances in solar cell technology and, this week, California’s proposal for the Nation’s Biggest Solar Program: 3,000 MW by 2016