Simmons Says $300 Oil in Five Years - 10/5/08

Matthew Simmons, founder of an energy investment banking firm, Simmons & Company International, said $100 oil is cheap.  Simmons is a firm believer in his prediction of $500 oil in the coming decades, but has recently predicted oil could top $300 per barrel within five years. 

Simmons believes supply is slowing, which could be a very troubling sign that we have reached peak oil.  If not, he says we are very close to it.  Demand shows no sign of slowing at $100 a barrel, which he thinks is preposterously cheap at $0.15 a cup.

Simmons says a cup of gas will take a car with the air conditioner on for two miles.  He says that is a bargain when comparing output from other energy sources.    

Simmons is more concerned about an energy shortage than the rising price of oil and that is when people worry.  He gives the example of the UK.  The price of a gallon of gas can reach as much as $9 a gallon, which has not slowed motorists from using their cars.

He says $9 a gallon has not slowed down anyone.  At $9 a gallon that works out to be $378 a barrel.  He believes it will reach that and higher in the next number of years.

Simmons does not believe we will totally run out of oil.  He believes we will run out of the light sweet oil, because it is easy to get out the ground.  We would be left with the hard to get oil sands.

Simmons is a leading expert in the oil production industry and author of a number of books including: Twilight in the Desert, The Coming Saudi Oil Shock, and the World Economy.  Simmons research has led him to believe Saudi Arabia will not be able to maintain its current level of oil production in the coming decades causing dire economic conditions. 

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