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Following on Arthur’s posting of the Investor’s
Guide to Avian Flu pdf*…
MATT: Let me give you some really interesting déjà vu numbers that I pulled out earlier this morning while
I was thinking about the irony of the 15th anniversary of Kuwait’s
invasion by Iraq. I had just produced a paper called the Coming Domestic Oil Embargo – and it got enough notoriety that
Forbes magazine was in preparation for doing a major article that came out a
week after Saddam’s invasion, called the Coming
Domestic Oil Embargo, and they had a fabulous illustration of Uncle
Sam filling up his car at a gas station and accidentally stepping on the hose –
and what the story was all about was my concern that unless we started a
totally different energy policy of using less energy, or a policy of expanding
our oil supply through removing the drilling bans in the inner Continental
Shelf, and finding a way to jumpstart creating more drilling rigs, and bringing
more people back in, we’d wake up some day – and I never thought it would be
that day, or anytime in the 90s, but I knew it would take 10 years to make this
happen – we would find we had actually embargoed ourselves. Let me tell you what the numbers
were all about, because I had not thought about this until yesterday and today.
In 1990 the United States was still producing 7.3 million bpd of crude oil, today
it’s 5.1; the 7.3 was after a drop over the previous 5 years of 1.6 million
bpd; our refineries only needed to run at 13 ½ million bpd; and we only needed
to import 5.8 million bpd of crude oil imports to balance our system. Today we
have to run our refineries at 100% or we have major product shocks; today, we
have to import 10-11 million bpd, or we lose crude oil stocks; we have to
basically create almost 3 million bpd of finished product imports; we have to
run the system on a 24-7, all Summer long. And we still liquidate stocks. So we have actually now created a
pending domestic embargo, and we’re going to be lucky to
get through the Summer without some periodic shortages. We probably will, but
the odds are probably as high we will have some shortages, and then if we get
through the Summer we have a fabulous respite from Labor Day to Thanksgiving,
until we hunker to try to figure out how the world gets through the Winter of
2005 and 2006 because oil demand globally could easily go to 86-88 million bpd
during the Winter, and that could easily exceed supply by 2-5 million
bpd.[38:53] JIM: If that was to happen we would almost be looking at $75-80 oil, I
suspect. MATT: No, no, no. Oil prices could easily go up 5-10 times. …a final question. Having read
your book what is it that we can do as individuals right now. MATT: We can
all clamor for energy data reform. That’s the one thing that can happen before the end of this
year, and where are mandated field by field quarterly production reports, and
the number of well bores each of those fields have; some data on proven
reserves we don’t even need. That’s the only thing we can do and effect in
2005, and that system being mandated would allow less than 30 people in less
than 30 days to come up with a realistic supply assessment over the next 3
years, and pretty well prove or disprove we’ve actually now exceeded peak oil,
or it’s right ahead of us. That’s the one thing that every person in the world
has a role in demanding that happen. And if people say, “Naw, that’s not
important,” we fully deserve every bit of pain we’re going to get. [1:02:29] JIM: When
you look forward into the future, 5 years out, 10 years out, are you optimistic
or pessimistic? MATT: Yes, I
am. I am optimistic that we’re going to figure this out, and we’re going to go to plan B and plan C and that 7-10 years from now
we’re going to say, “look at all the fundamental changes we’ve made.” And we’ll
have a better economy, and we’ll have resolved all
these nasty, nasty fights between modern energy producers, and people that have
called themselves environmentalists. And actually have a better quality of
life. And we’ll be paying very high prices for energy which we should have been
doing for the last 100 years. [1:03:00] Investors Guide to Avian Flu http://www.bmonesbittburns.com/economics/reports/20050812/avian_flu.pdf Mail scanned by NAV |
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