The Future of Oil

Foreign Policy poses seven questions to Matthew Simmons, a chief proponent of the idea of peak oil. Some of the juicier ones:

FP: You’ve written that Saudi Arabia relies on old and overproduced oil fields that are likely to start declining in output. How has Riyadh responded to your analysis?

MS: They’ve said “trust me, we have no problems.â€? Petroleum Minister Ali Naimi said that they could pump up to 15 million barrels per day for as many as 100 more years. The likelihood of that is as remote as me being on the moon 10 years from now. They dismiss requests for any field-by-field data as preposterous, and simply say that they’ve been a reliable supplier of oil for 70 years. My view is that it’s just good supply chain management to ask a key vendor for details about their capacity. Plus, they are shopping the market so hard for drilling rigs right now. If they can produce 15 million barrels per day for another 50 to 100 years, why do they need new rigs?

FP: Which countries are best positioned to deal with a decline in oil production?

MS: Papua New Guinea. Unfortunately, that’s an honest answer. The countries that haven’t yet built a society that needs an exponential amount of oil are in the best shape. Around 30 years ago, around half the world didn’t really use oil. And now look, cities like Hanoi have millions of motorcycles they didn’t have five years ago. We’ve built the global economy based on the false assumptions that oil is just another commodity, that the Middle East has basically unlimited amounts of oil, technology will improve, and that the price of oil would get progressively cheaper.

The more I’ve gotten into this, the more similar it is to what we do in our own minds with ignoring people’s getting old. When do you take your parents’ car keys away? It’s so painful that you go into denial that they’re getting really old.