[Oilguy]

There is an open secret in the oil industry that dare not speak its name: peak oil.

Well, two did speak its name and gained no acclaim for it. One, M. King Hubbert, died years ago. The other and the most controversial, Matthew Simmons, died at his Maine summer home Aug. 8.

The peak oil idea is simple: Oil is a finite commodity, and one day we are going to use up all of it.

Hubbert, a geologist, began speculating on the effects of the gradual decline in worldwide production in the 1950s. He expressed this in a simple graph, which became known as “Hubbert’s pimple.”

He tended to draw the graph freehand, and it looked more like a Rubenesque breast than a pimple. It was so simple that he drew it over and over again to illustrate his points for journalists and politicians. Later, he would draw lines through the pimple to demonstrate where we had been and where we were going, based on the then-known reserves and rate of depletion.

For his scholarship, Hubbert was eased out at Shell Oil Company in 1964. He took a job with the U.S. Geological Survey and continued his speculative research--until he was thrust into national prominence by the oil crisis of the 1970s.

Simmons, in contrast, was a much more apocalyptic predictor than Hubbert. His illustration is a stark tower of a graph, more like the Empire State Building than the gentle curve of a woman’s breast. He saw all the oil on Earth savagely used up in just two centuries, the 20th and the 21st , resulting in international catastrophe probably by 2040.

In one television interview, Simmons sounded like a survivalist. He said he was stocking his home with all kinds of supplies in order to survive the food and fuel shortages which would accompany the decline in oil availability, and the impending international chaos and hostility.

In the energy industry, which has a definite aversion to bad news and hard questions, Simmons was an agent provocateur and an effective one; effective because he was of the industry not outside it.

Simmons was an oil man and his firm, Simmons & Company International, was founded in Houston in 1974. It grew to be one of the world’s most influential energy investment banks, with offices in Houston, London, Aberdeen, Scotland and Dubai, United Arab Emirates. It has been responsible for hundreds of billions of dollars of merger and acquisition activity.

Full article at: http://oilprice.com/Energy/Crude-Oil/Th ... n-Out.html

[MD]

The peak oil idea is simple: Oil is a finite commodity, and one day we are going to use up all of it.
...

It's extremely unlikely that humans will ever use up all of the oil.

Instead it will become increasingly expensive thus causing use patterns to change dramatically.

There's your "simple idea" right there.

[steam_cannon]

Good article. It does a nice job summarizing his role in bringing together research on international oil production and creating awareness of the severe problems we are facing. Also it briefly gets into his business relations with BP and Simmons bank, which is interesting all by itself.

“Hubbert’s pimple.”

LOL, this part seemed funny to me. I've heard this term before and I believe it was a term more popular with critics. Today "Hubberts Peak" is the more correct term.

[ian807]

A more accurate term for what Simmons talked about is "Supply Depletion."

We'll never use up all the oil that exists - only what is energy positive and profitable. Neither of these things, energy return or profit, are constants. We'll see effects from supply depletion long before we "use up" all the profitable oil and those effects will happen fast because of oil price feedback. Here's how that works:

1) Oil prices increase over time due to increased demand and limited supply.

2) The price of anything tied to the price of oil increases (transportation, chemicals, fertilizers, food, etc.)

3) The price of finding, producing and distributing oil goes up too, along with everything else. This isn't a "linear" process. Because of this feedback, oil prices go up rapidly, not gradually, until...

4) The economy crashes and oil demand decreases, as do oil prices.

5) The economy recovers.

6) Go to step 1, and repeat, repeat, repeat.....

If we're lucky, we start getting serious about conservation and get renewables into the system in a big way, and slow the price spikes and curves. If we're too stupid, or too slow. There will be a last oil crash, and then a very slow crawl back up to current energy consumption.

And probably a few billion folks will starve in the meantime.

Cheers!

[americandream]

How we react to the depletion of a core commodity within a system premised on growth and increasing annual profits and dividends, can hardly be characterised as stupidity. A compulsion perhaps, as businesses struggle to stay afloat, stupidity no. At some stage, governments will be forced to intervene in a bid to preserve the gains of modernity and global civilisation and it is here that the Marxian dynamic of economic dialectics kick in, but in the meantime, the death throes of capitalists are hardly stuipid, more accurately, a compelling function of the paradigm that sustains their entrepreneurial logic.

A more accurate term for what Simmons talked about is "Supply Depletion."

We'll never use up all the oil that exists - only what is energy positive and profitable. Neither of these things, energy return or profit, are constants. We'll see effects from supply depletion long before we "use up" all the profitable oil and those effects will happen fast because of oil price feedback. Here's how that works:

1) Oil prices increase over time due to increased demand and limited supply.

2) The price of anything tied to the price of oil increases (transportation, chemicals, fertilizers, food, etc.)

3) The price of finding, producing and distributing oil goes up too, along with everything else. This isn't a "linear" process. Because of this feedback, oil prices go up rapidly, not gradually, until...

4) The economy crashes and oil demand decreases, as do oil prices.

5) The economy recovers.

6) Go to step 1, and repeat, repeat, repeat.....

If we're lucky, we start getting serious about conservation and get renewables into the system in a big way, and slow the price spikes and curves. If we're too stupid, or too slow. There will be a last oil crash, and then a very slow crawl back up to current energy consumption.

And probably a few billion folks will starve in the meantime.

Cheers!