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By Robert Rapier on Jul 23, 2010 with 85 responses

Is Matt Simmons Credible?

Introduction

I am going to address a touchy subject in this essay, but I simply can’t ignore it any longer. I have noticed that a lot of people are finding my blog through keyword searches of “Debunking Matt Simmons.” About two and a half years ago, I did write an essay called Debunking Matt Simmons. Because of Matt’s recent claims about the disaster in the Gulf of Mexico, there has been a spike in interest over whether his claims related to the disaster are actually credible. So now seems like a good time to revisit the subject.

Claims like "BP will file for Chapter 11 by July 9," and that "the 'real, untold story' is another leak that is 5-7 miles away spewing 120,000 barrels per day" are ruining Matt Simmons' credibility.

The topic is touchy because Matt Simmons has long been revered in the energy business, and some of his fans will be upset with me for writing this.

But Simmons has lately been making what I feel are very irresponsible and sensational claims that don’t hold up to scrutiny. So I will review his history here to show a pattern of Simmons making sensational predictions based on meager and/or misinterpreted data; predictions that later proved to be grossly inaccurate.

Matt Simmons, Investment Banker and Author

Matt Simmons is an investment banker to the oil industry, probably most well-known for writing the book Twilight in the Desert. The book laid out the arguments that Saudi Arabia had overstated their oil reserves, that their oil production was on the cusp of decline, and that prices were set to soar.

The book became very popular, especially when Saudi production began to decline shortly after the book came out.

My view was that Saudi production fell not because of the arguments Simmons put forward in Twilight, but rather because the Saudis were holding production back to keep prices up. So my feeling was that the Saudi decline was unrelated to many of the arguments that Simmons put forth. And in fact a couple of years later as oil prices climbed, Saudi production climbed back into record territory.

But I thought the book was important for two reasons. One, it put a spotlight on Saudi Arabia and really highlighted the importance of that country to the rest of the world, especially once oil supplies began to shrink. Second, it called a lot of attention to the issue of peak oil. I have always said that Twilight and The Long Emergency were both influential in causing me to become more involved in writing and talking to people about energy.

That isn’t to say the books don’t have flaws. They do. In Simmons’ book, I felt he frequently came to conclusions that weren’t warranted by the arguments he presented. A famous example is his “fuzzy logic” argument. Fuzzy logic is the basis of many control systems, but Simmons incorrectly interpreted the phrase to mean “hunch.” So when the Saudis used fuzzy logic in their control systems, Simmons made an argument that they were really guessing about their oil reserves. In his own words, “if they can basically just keep turning on a tap, why does it take fuzzy logic?” The comment was nonsensical, but as later events would show not simply an isolated example of Simmons speaking out when he didn’t know what he was talking about.

Matt Simmons, Layman

Twilight in the Desert made Simmons famous, and he began to be called upon as an expert on all things oil-related. There were two very big problems there. First, Simmons is an investment banker, and is not remotely an expert on all things oil-related. In fact, I don’t know anyone who is. But the bigger problem is that he either thinks he is, or just can’t say no to requests to do interviews and presentations. And when he does those, he frequently makes sensational claims and predictions. I am on an e-mail list where I saw this recent comment about Matt from a long-time admirer of his work, which I think hits the nail squarely on the head:

I think something happens to the psyche when the media pay attention to you for so long. You stop all self criticism, believing that whatever thoughts come to your mind have validity and import. In truth, it doesn’t matter if you are eventually proven wrong, because by then you’re off on the next topic.

Simmons’ Blunders at ASPO 2008

In my previous essay on debunking Simmons, I provided some examples of Simmons making factually incorrect statements. These statements were based on him not having enough information (or bad information), yet still speaking authoritatively on a topic. There were two later examples from his talk at the 2008 ASPO conference — where I also presented. (See his presentation here). He claimed in his presentation that we don’t have a good idea of our gasoline inventories, and because of Hurricane Ike we were just beginning a gasoline crisis that could bring the entire country to a halt. He spun quite a frightening tale, and I could see the shock on some people’s faces.

Contrary to Matt’s argument, the evidence was just the opposite. Even as he was speaking, refineries were coming back online from the hurricane outages and inventories were recovering. I caught up with Simmons later and told him that I used to work in a group in a refinery that provided inventory data to the Department of Energy, and we do indeed have very good data on gasoline inventories. So his fundamental premise was wrong. I was asked about Matt’s comments on a later panel session, and I said that gasoline inventories were beginning to recover and that I predicted they would be higher in a month. They were. Matt’s frightening scenario based on Hurricane Ike didn’t come to pass.

Another example is his argument about the $100 trillion corrosion issue in the oil industry. The gist is that he argues that the oil industry is full of rusting infrastructure, and he questions whether we have the money or even the iron resources to fix the problem. Further, he questions aloud how it is that he – Matt Simmons, investment banker – has ‘discovered’ this problem that the oil industry has missed. I won’t go into all of the reasons that Matt is way off the mark on this, as that would be an essay in itself. A corrosion engineer at The Oil Drum once weighed in on this issue, and explained that corrosion is well-understood, and not something that Simmons discovered. Oil companies are full of corrosion engineers who work to replace corroded equipment as needed. But it was another oil-related “crisis” Simmons “discovered” and he ran with it.

And that brings us to his recent interviews over the spill in the gulf.

Sometimes Silence is Golden

Personally, I have a rule about presentations and interviews: If the topic is outside of my area of expertise, I decline. If CNN calls up and says “Can we interview you on the future of the solar industry?” I will tell them no and give them the names of some experts in the field. Lately I have been asked a lot to comment on specifics on the disaster in the Gulf of Mexico. I always decline, again because there are plenty of people who know more about the specifics than I do.

Simmons doesn’t seem to have a filter that tells him to pass up an interview if he might not know what he is talking about. Here is a sampling of some recent interviews in which he makes numerous extraordinary claims. I have included some of the more extraordinary claims below, but there are plenty more out there that I didn’t list.

On Bloomberg: Simmons Says Government Should Take Over BP Oil Clean Up

On CNN: The Gulf Coast oil spill’s Dr. Doom

With Dylan Ratigan on MSNBC:

Simmons’ Sensational Claims on the Gulf Spill

In these and various other interviews, Simmons claims:

1. Use of a small bore nuclear device is the “only option” to stop the flow of oil.

I don’t want a banker who doesn’t know what fuzzy logic is being taken seriously on the issue of using nukes in the Gulf of Mexico.

2. BP would be insolvent by July 8, 2010. He has also stated several times that the stock is going to zero.

While I have said that I don’t think the BP brand can continue in the long run, I wouldn’t call them insolvent and it will certainly take some time for the legal issues to play out. A prediction of insolvency by July 8th was ridiculous. Simmons has also shorted BP stock, so some of this may be wishful thinking on his part.

3. The “real, untold story” is another leak that is 5-7 miles away spewing 120,000 bbls/day.

I haven’t the faintest idea where he came up with this, but I have spoken to several experts who say the chance of that is zero.

4. That there is an underground lake of oil that is 500 feet thick, 100 miles wide, and may be covering 40% of the Gulf of Mexico.

As one person calculated, that would equate to 500 trillion barrels of oil; total global reserves are estimated in the region of 2 trillion barrels.

5. The leak could last 24 years.

He believes this, because short of the nuclear weapon idea he sees no other way to stop the leak and thinks we may have to wait for all of the oil to come out of the reservoir. Meanwhile, the news is that BP is starting to get the leak under control.

6. The gulf states need to be evacuated.

Simmons says “We’re going to have to evacuate the gulf states. Can you imagine evacuating 20 million people? . . . This story is 80 times worse than I thought.”

That last claim was in the Washington Post, leading one critic to ask of the story’s author:

Did he consider that Simmons is a financial analyst and may have an agenda in creating heightened hysteria surrounding the spill?

Did he consider the effect printing this claim could have on the people of the Gulf Coast?

When Appealing to Authority, Make Sure the Authority is an Authority

Here are some comments I recently read from an actual petroleum expert (geologist) on some of Matt’s arguments:

He doesn’t seem to understand that the rig was connected to the well by the riser before it sank, and it was spewing oil and gas into the rig from the blow out. He also doesn’t seem to understand that most old blow outs occurred when drilling – and the drill string would get blown out of the hole – not the casing. And he doesn’t seem to know that blow outs are more common than we are currently aware and that relief wells are tried and tested means of stopping this. And he is the foremost oil expert in the World!

This is the problem in a nutshell. He is making authoritative, alarming, and far-fetched claims, but the real experts aren’t backing him up. His claims are quite consistent with his claims of recent years where he goes out on a limb, finds himself all alone, and eventually just jumps to another limb. I can’t figure out if he is simply after publicity to sell his book, or whether he is really as deluded as his comments seem to indicate.

Yet one thing interviewers almost always do is play up Matt’s experience. The danger in this sort of appeal to authority comes about when the supposed authority isn’t really an expert, and yet has the potential to cause mass hysteria and/or influence public policy. Simmons thinks it would be a good idea to set off a nuclear explosion in the Gulf of Mexico. He thinks we should evacuate 20 million people in the Gulf Coast. He has influence. But I think the media needs to start doing a better job here and stop facilitating this nonsense.

Conclusions

The purpose of this essay was not simply to dump on Simmons. But he is involved in sensationalistic fear-mongering, enabled by the media’s mistaken belief that he is an expert in all things oil-related. I want to make sure people know that they should take his claims with the grain of salt they deserve. As I have documented here, that grain of salt is warranted based on his history of sensational claims that never materialized.

Sadly, I believe he is in the process of destroying his credibility, and I ultimately do not think history is going to judge him kindly when it looks back on these events. This is very unfortunate, because despite the sensational claims, I still believe he is correct on a lot of the big picture questions of peak oil, long-term prices, and the need to take action. But if he loses his credibility, he will diminish his ability to convince people of the importance of the big picture issues.

  1. By Peter Wang, PG on July 23, 2010 at 6:50 am

    I have wondered at times if Mr. Simmons says what he says in order to create favorable market movement which would benefit whatever financial position he has.

     

     

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  2. By Dr. J on July 23, 2010 at 10:05 am

    I have recently blogged on my blog about the rise of the so-called “experts” that have come out of the woodwork with the BP oil spill. Simmons is no expert in deepwater drilling and E&P operations. But neither are most all you see on MSNBC, NBC, CNN, CBS, etc. One of the worst charlatans is Michio Kaku, a theoretical physicist who is an expert in string theory but has been promoting his books, shows, and political agenda on stopping all fossil fuel use. The “expert” recently hired by the Obama kangaroo commission on the oil spill is yet another one with a political and professional agenda to promote, not objective science and engineering.

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  3. By Steve K on July 23, 2010 at 10:18 am

    Thanks Robert, I listened to a radio interview with Simmons. I thought that he was crazy making some of the statements. The part about a methane cloud coming on the coast and killing millions was wild! I thought the guy had some grasp of reality before this, but now he has lost all credibility with me. I think he just jumped to another limb…. and it broke.

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  4. By Andrew DeWit on July 23, 2010 at 10:19 am

    Mr Rapier,

    I think you’re right on Simmons. And I agree that it’s sad to see him wreck his credibility. He seems to be a very earnest person, and is working on some of the most important issues we face. It would be great if he’d hold back and use his input constructively.

    All the best,
    Andrew DeWit
    Tokyo

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  5. By Rob Thomas on July 23, 2010 at 12:17 pm

    Whay doesn’t someone ask Matt to provide GPS coordinates for the open hole ~6 miles away he claims is where the Deepwater Horizon sank (aka the real well bore) and the current GPS coordinates of the boats working above the leaking well bore, ROVs, etc on the news daily? These sets of GPS coordinates would validate or invalidate Matt’s view.

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  6. By robert minyard on July 23, 2010 at 1:49 pm

    I read his Twilight book and it was absolutely the worst reading I have ever done. It was so far off the mark about the oilfield and oil. The book was terribly written and extremely hard to read and filled with so much statistics that you would have analysis paralysis to even begin to understand it. I also heard him speak at a luncheon in Lafayette and he was absolutely the worst speaker I have ever heard. He read from a power point, never looked up at the audiance, told us how he was so busy and he barely had time to stop in an speak with us while he was on his private plane,  and he glossed over several subjects and there again, he was so inaccurate. i think the guy has dementia. He is so far off the mark on BP that it makes no sense. We barely have any oil even close to the Louisiana coast and now that it has been 8 days since the leak is capped, no one can even find any oil. I have several friends in the cleanup business and lately have barely cleaned up any oil because it is so dispersed. The Kevin Costner equipment has not picked up andy oil to speak of.The story about the crack is about as crazy as anyone has seen. How can the man say that the spill is going to break BP. What about Anadarko and the Japenese, are they getting a free ride. how about the fact that the blowout preventer did not work. Waht about the owner and manufacturer of the BOP? How about Halliburton and the mud company and Transocean. how can a supervisor for Transocean go along with the BP company man and walk away and say well I guess this well is going to blowout and kill everone including me and not do a work stoppage? Do you reallly think that anyone in their right mind would circulate mud out of a well if they really beleived that the well would come in and kill themselves and others? I say they all were a bunch of inept people who caused this whole mess and certainly not just BP.

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  7. By rrapier on July 23, 2010 at 12:30 pm

    I have wondered at times if Mr. Simmons says what he says in order to create favorable market movement which would benefit whatever financial position he has.

    Peter, many people are wondering whether that’s it as well. It’s a really troubling possibility; one I didn’t want to delve into here. But we did debate whether to just lay that out on the table and discuss it. I know many people who do think that money is the driving factor in many of his comments, but I personally can’t quite come to grips with that possibility yet. A willingness to cause mass hysteria and spread disinformation to make a few more dollars would paint him as a despicable person. I prefer to believe he is simply deluded.

    RR

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  8. By Rufus on July 23, 2010 at 12:32 pm

    I quit paying attention to him two years ago when he said gasoline had a higher Octane Rating than Ethanol.

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  9. By rrapier on July 23, 2010 at 12:35 pm

    I quit paying attention to him two years ago when he said gasoline had a higher Octane Rating than Ethanol.

    I highlighted that one in the previous story. That was one of his factually incorrect claims.

    RR

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  10. By Kevin Kelley on July 23, 2010 at 2:12 pm

    Thanks for this info. As luck would have it I’m currently reading Twilight in the Desert. Mr. Simmons has the credentials so I figured he was authoritative enough that his book can be taken at face value. Should I bother reading it? You say that the Saudis hold back reserves when it’s to their advantage, but is there an actual risk that they may be running out of oil? These sensational claims only reinforce the belief that peak oil is a doomer tin-hat subject and few take it seriously (of those who are even aware of the concept). Peak oil will happen, it’s just a matter of when and these sorts of sensationalised claims only do a disservice to getting the message out.

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  11. By J K on July 23, 2010 at 2:16 pm

    I read Matt’s book and thought he raised some valid and important points.

    I started wondering about him though, when he started talking up his idea of 90-story (that’s right – not 90 feet or 90 meters – 90 stories) tall floating windmills off the cost of Maine. When I first saw him discuss the BP spill, I realized something had gone wrong. He even looked rather strange.

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  12. By rrapier on July 23, 2010 at 2:38 pm

    I also heard him speak at a luncheon in Lafayette and he was absolutely the worst speaker I have ever heard. He read from a power point, never looked up at the audiance…

    I was trying not to excessively pile on him in the essay, but that was my experience at ASPO 2008. In fact, I said to the people at the table with me “I can read, you know.” This, after Simmons simply read the bullet points off of one slide after another in a monotone voice. Nothing like his persona when he is being interviewed on TV.

    RR

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  13. By Takchess on July 23, 2010 at 2:39 pm

    I suppose this is what we get when the media values sensationalism over accuracy and news departments sacking science reporters. I suppose if you call yourself an expert and say something interesting enough you can get on today’s news.

    Robert, any future post on the new Energy Bill ? Interesting idea about refurbing trucking to run on NG. We will hear from Benny on that one. 8)

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  14. By rrapier on July 23, 2010 at 2:43 pm

    Should I bother reading it?

    When people ask that, I usually tell them it depends on what the rest of their reading list looks like. It was good at the time for bringing awareness to peak oil. But you will find questionable logic throughout the book.

    You say that the Saudis hold back reserves
    when it’s to their advantage, but is there an actual risk that they may
    be running out of oil?

    The world is certainly in a risky position relative to Saudi. I don’t think they are running out of oil, but I also don’t think they have massive production offline. They are probably sitting on 1 to 2 million bpd right now, but many give them credit for far more excess capacity than this. The problem is that many governments are expecting them to continue increasing production. What happens when they can’t? What happens when they earnestly start down the decline slope? These were the sort of important questions I think Matt raised in Twilight.

    RR

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  15. By doggydogworld on July 23, 2010 at 3:11 pm

    I agree with Robert Minyard that dementia is the best explanation.

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  16. By Walt on July 23, 2010 at 4:42 pm

    Excellent job again.  I’m liking this site more and more on energy topics.  I agree totally against this sensationalism…but believe it would not have been so bad had the government (and BP) had implimented a “media blackout”.  Whether you are citizen journalist on Huffington Post rapidly growing internet newspaper, or someone one from CNN trying to dig into the facts…it must be frustrating.  I am not a believer in sitting in a press room just reporting the news as dictated by the government.  I’ve seen too much of that traveling around the world…especially here in America where investigative jouralists have been replaced with lazy reporters (sorry if that is offensive).  It is one reason the Huffington Post site is hosting (as I think was the last count) 6,000 bloggers and citizen journalists…and not just reporters of whatever said is the facts.  Let’s give a thumbs up to the bloggers out there who dig into these stories like RR did above, and don’t sit in front the the media press core taking notes to report!

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  17. By j on July 23, 2010 at 5:23 pm

    I can’t believe you wrote this useless article…

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  18. By Kit P on July 23, 2010 at 5:41 pm

    “small bore nuclear device”

     

    Nonsense, but shaped charge nuclear devices are very useful at closing stuck open ‘worm’ holes.  

     

    I surf back and forth between the SiFi channel and cable news.  If they are close on the science it must be the SiFi channel.  

     

    Seriously, information from any sources should just be a starting point for understanding an issue.  I heard the that after the Exxon Valdez there was a significant change in environment and safety in their Operations Integrity Management System.  It was reported that ExxonMobil has a very small number of serious safety violations while BP has a very large number.  

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  19. By Menelik on July 23, 2010 at 5:50 pm

    Matt Simmons says hurricane churning up underwater methane may be “greatest nightmare we’ve EVER http://bit.ly/cWFYD3 time will tell less than 48 hours …

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  20. By Benny BND Cole on July 23, 2010 at 5:55 pm

    Matt Simmons discovered, as did Kunstler, that dramatic doomsaying can get your media coverage–and maybe speaking fees, consulting gigs. Both have made strings of preposterous statements. Hey, it’s more more being famous than right anyway.
    Saudi Arabia is still pumping oil, in fact keeping oil off the market.
    I see Colin Campbell is backing off his price predictions, and Nate Hagens has also discovered the price mechanism.
    Sad, that both of them spent so many productive years preaching doom, and now they say oil won’t breach $100 permanently, as the demand is just not there. Campbell is even talking about Peak Demand.
    Making prediction is hard, especially about the future. But even with so much production shut in due to boob-and-thug states–Mexico, Libya, Iran, Iraq, Nigeria, Venezuela–the price mechanism seems likely to head off calamity. Indeed, I contend we will see a cleaner and more-prosperous world in the future.
    Remember–oil use has been falling for decades in Japan and Europe, even as living standards rise, and their environments get cleaner. We can do the same.
    The second inning of post-oil era is coming–PHEVs, CNG cars and much higher mpg ICEs.

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  21. By jack nichols on July 23, 2010 at 6:13 pm

    Quis custodiet ipsos custodes? who is this author that feeds on the success of another. I am sorry but this article is this subject of speculation not fact. Who knows if Simmons is correct but he seems to back his statements with fact. He has certainly staked his reputation on his claims. If he is wrong he will be crucified, this author will be forgotten before anybody will remember what he said. This speculative article is nothing more than gossip and story telling

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  22. By rrapier on July 23, 2010 at 8:58 pm

    I can’t believe you wrote this useless article…

    Why, because we should give irresponsible fear-mongering a free pass if it comes from Matt Simmons? There are no sacred cows here.

    RR

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  23. By rrapier on July 23, 2010 at 9:05 pm

    jack nichols said:

    Quis custodiet ipsos custodes? who is this author that feeds on the success of another.

     

    Sorry, Jack, your response is more nonsense than what I was debunking. Since when did debunking become feeding off of someone’s success? Methinks you are a bit mixed up.

    I am sorry but this article is this subject of speculation not fact.

    False, Jack. I documented claims that have already been proven wrong, because they were made based on faulty information. But that didn’t stop Simmons from spinning some scary stories.

    Who knows if Simmons is correct but he seems to back his statements with fact.

    Again, no. You must not have read the article, because I have shown a number of examples in the initial debunking article and in this one of  him backing up his statements with fiction. That isn’t speculation on my part. So we already know on many of these claims that Simmons isn’t correct.

    He has certainly staked his reputation on his claims. If he is wrong he will be crucified,

    But it needn’t come to that. Since when did the media become so lazy that they they allow someone to make blanket statements of fact, again and again, that aren’t even physically possible?

    this author will be forgotten before anybody will remember what he said.

    Are you trying to debunk me? Don’t try to feed off of my success Jack (per your definition).

    This speculative article is nothing more than gossip and story telling.

    Your response is confused gibberish. My article was based on facts. If you have an issue with any of the facts, by all means lay it on table.

    RR

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  24. By Mr. Anonymous on July 23, 2010 at 11:15 pm

    I think the above article is quite appropriate!

    I have listened to everything that Matt Simmons has said during many (recorded) interviews for television and radio, for an alternative perspective.

    While I am most interested in the possibility that a large amount of oil is gushing from the actual borehole (as distinct from “the riser”) and that the existence of large underwater plumes of oily substance could have been covered-up; Simmons is not speaking with the kind of clarity that I would expect from someone with genuine insight. He uses the jargon of the oil industry in a superficial way that indicates charlatanism, while also making the kind of mistakes that really do resemble dementia.

    What exactly Simmons’ GOM contacts “know” about the real oil situation may well come to bolster his credibility by association. That this man is advocating the use of nuclear explosions is certainly of concern. The potential for shattering consolidated strata and disturbing methane hydrate deposits is surely one that exists!

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  25. By Vin on July 24, 2010 at 7:48 am

    Another point to consider, he is/was a CFR (Council on Foreign Relations) member. Either he is speaking out of order or he has decided to go rogue with his doomsaying (which, if true, one would think he would have already mysteriously met his death).

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  26. By hg on July 24, 2010 at 12:34 pm

    Thanks for writing this! Because people are having a hard time getting real answers, I think a lot of people are turning to Matt’s predictions because he says he can “tell you what they are not telling you”. But I’ve also noticed that every turn of events in the oil spill – first the use of dispersants, then the hitting the loop current, then hurricane Alex, then methane gas bubbles, now tropical depression Bonnie – he starts screaming mass extinction. It’s like he’s blowing his own cover. It’s a shame, because people really do need answers. But you aren’t going to get anything useful from anyone who tells you we are all going to die.

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  27. By Spec on July 24, 2010 at 3:12 pm

    Yeah . . . he has been going on about how the methane is a potential toxic disaster in the making. Ironically, millions of homes have valves that allow this toxic gas to spew into their homes. They are called ‘kitchen ranges”. Of course they can be very dangerous if not used properly. But just the fact that we allow people to spew methane into homes shows it isn’t toxic gas that could be used as a weapon as he indicates.

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  28. By Dave Cohen on July 24, 2010 at 4:46 pm

    I decided about 3 years ago that Matt Simmons had no credibility. His latest remarks on the oil spill also indicate that he is not playing with a full deck.

    I told CERTAIN PEOPLE that every time Matt opened his mouth, peak oil credibility took a big hit. I was ignored. I thought Simmons was especially damaging because the media (CNBC, the newspapers) would always call him when they wanted to do an oil story. He predicted–is predicting?–$200 oil when it was clearly the case that such a price was impossible. Hirsch too. (The price is impossible because you get a lowered demand response long before the oil price gets that high.)

    I haven’t wanted to say any of this in public, but since you just let the cat out of the bag, Robert, I wanted to go on the record.

    I see that Simmons along with the equally shrill Jeffrey Rubin are the featured speakers at this year’s ASPO-USA get together. If I were still part of that organization, I would have strongly argued against their inclusion at the conference. Needless to say, I won’t be there. I think featuring somebody who has lost his marbles as your main speaker is a big mistake.

    best,

    – Dave
    Decline Of The Empire

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  29. By rrapier on July 24, 2010 at 6:16 pm

    Dave! What’s up friend?

    I have gotten a trickle of hate mail asking who I was to question whether the emperor is wearing clothes, but most of the replies have been “I have been thinking it; I am glad someone finally said it.”

    I think Matt has done a great deal to educate people on peak oil, but at this point he has also done a great deal of damage. I wonder whether the damage may now exceed the good.

    Don’t be a stranger.

    RR

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  30. By Mr. Anonymous on July 24, 2010 at 6:25 pm

    Vin said:

    Another point to consider, he is/was a CFR (Council on Foreign Relations) member. Either he is speaking out of order or he has decided to go rogue with his doomsaying (which, if true, one would think he would have already mysteriously met his death).


     

    In addition to being a CFR member Simmons is an advocate of population control.

    On a recent radio interview he dodged a question relating to a large sell-off of BP shares (by BP Chairman, Goldman Sachs and Obama’s asset holder, Vanguard) a few weeks before the disaster; merely making further references to BP’s poor record on safety.

    Simmons also suggested that former presidents Bush (junior) and Clinton be brought in to assist Obama with the oil situation. Bringing these three Bilderbergs together would probably result in little more that a Bohemian Grove style mini-orgy.

    I note that Simmons is very quick to dismiss the toxicity of “CoreExit“, insisting that it’s toxicity is not a consideration compared to the oil. The reality indicates otherwise.

    The fact that Simmons served as an energy advisor to the Bush Administration and talks down BP stock on-air while privately shorting it shows what kind of person he is.

    In my opinion, the disaster in the Gulf was engineered because the introduction of the Bilderberg’s global carbon tax was at risk, due to the world’s growing realization that so-called cataclysmic man-made “Climate Change” is a huge fraud. BP was chosen to “fall on it’s sword” to introduce an alternative “crisis”. Obama was quick to limit BP’s liability to tiny amount, and BP is used to changing it’s name whenever it is necessary. No doubt moving all its real assets beyond the USA with every day that passes.

    It is known that members of the Bilderberg group, CFR and Trilateral Commision like to prophecise events before they occur. Their megalomania probably requires this. After the event they get to look knowledgable, as they imagine that “gods” should be.

    Even allowing for Simmons’ charlatanism and possible dementia, there is enough of a pattern to his pronouncements to infer that he “knows” that BP (in it’s present form) will become (formally) bankrupt, and that there is much worse to come. In defiance of all the “leaks” that have come from Transocean/Deepwater Horizon workers, Simmons pretends that president Obama and his (Goldman Sachs) administration is confused by BP.  In reality he appears to be diverting attention away from Barry Soetoro (err… I mean “Obama”) so that fall-guy BP will receive the full brunt of the public’s anger. His rewards will be profit from the collapse of BP’s stock; recognition (from the Globalists) for promoting Obama and his (Goldman Sachs) administration as victims of BP; and the opportunity to act like an expert through the media. If his pronouncements come true then he may even secure himself a role in future government.

    Personally, I am aware that the Bilderberg addition of Sodium Fluoride to water supplies was a Nazi concentration camp practice, and probably haven’t consumed enough to have become a Bilderberg sheep yet; or enough of the myriad of other toxins that have been knowingly placed in our water, food and environment to gradually sterilise us. It is easier therefore, to realize and accept where things are headed, and the tyrannical nightmare that is unfolding in America and the World. The worst kind of tyranny , paved by the “good intentions” of an intellectually arrogant , wealthy “elite” , who imagine themselves as a financial master race. Their intentions declared in the Georgia Guidestones. An Earth where less than 500 million humans are permitted to live. Those without the means to securely grow their own food will begin to face this nightmare quite shortly.

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  31. By Rufus on July 24, 2010 at 6:49 pm

    Yikes! :)

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  32. By JohnK on July 24, 2010 at 8:13 pm

    Great stuff Robert – One of your best.  

    A few years ago, Simmons scared the hell out of me.  Now his comments are laughable.  

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  33. By steve from virginia on July 24, 2010 at 8:48 pm

    Simmons is off track, so are most of the other pundits. Me too. To err is human.

    Simmons is right about two things; overstated reserves in the Middle East and the ongoing brain drain in the production side of the oil business. Neither conditions are fatal per se, but contribute to the downward spiral.

    As for the rest, he is no less credible than BP or the US Federal government. What is one liar compared to a pack of them?

    Most analysts misinterpret deflationary impacts of high real oil prices. Let me restate that, almost every single economist on planet Earth seems to have missed/ignored the fact that super- high prices for any good makes them unaffordable. Simmons was burned because he predicted super- high petro prices by the end of this year … but until recently, so hath Jeff Rubin!

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  34. By michael kane on July 24, 2010 at 11:34 pm

    The NOAA just confirmed that subsea gulf oil plumes are from BP. Now without a doubt, those plumes are the most important aspect of Simmons claims that there are multiple leaks miles along the ocean floor.
    http://www.truth-out.org/resea…..-well61662
    You can’t crucify Simmons for a few missed price and stock predictions. No one gets that right all the time.

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  35. By rrapier on July 25, 2010 at 12:02 am

    The NOAA just confirmed that subsea gulf oil plumes are from BP. Now without a doubt, those plumes are the most important aspect of Simmons claims that there are multiple leaks miles along the ocean floor.

    You are reaching here. The plumes they are talking about are far away from any massive leak Simmons is talking about. It was fairly well established long ago that there were likely plumes as a result of the leak. But that is a far cry from Simmons’ claims.

    You can’t crucify Simmons for a few missed price and stock predictions.

    This has zero to do with missed price predictions. It is about terrifying people with sensationalistic claims not backed up by the evidence.

    RR

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  36. By Dork on July 25, 2010 at 12:49 am

    Wake up!

    Compare MATT SIMMONS “interests” vs BP’s “interests”.
    SIMMON’s “interest” is simply to reveal the truth. He has shorted BP stock, as disclosed. Obviously he believes what he is saying.

    BP’s “interest” is purely for profit. Period. Does a major corporation have any other interest? They will lie, cheat, steal, maybe even murder to protect that interest.
    Read: The Corporation: The Pathological Pursuit of Profit and Power
    http://www.amazon.com/Corporat…..mp;sr=1-20

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  37. By OD on July 25, 2010 at 2:02 am

    4. That there is an underground lake of oil that is 500
    feet thick, 100 miles wide, and may be covering 40% of the Gulf of
    Mexico.

    As one person calculated, that would equate to 500 trillion barrels of oil; total global reserves are estimated in the region of 2 trillion barrels.

     

    Oh if only that were true! Goodbye energy woes and peak oil. Reminds me of the story I read awhile back from some so called ex military expert who said there was enough oil leaking to soon pollute all of the world’s oceans SurprisedSmile

     

    I see the simmons-freaks are coming out, no surprise.

     

    Mr. Anonymous, you seem to be just as far out in left field as Mr Simmons, just saying.

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  38. By Alexander Ac on July 25, 2010 at 9:25 am

    Hi Robert,

    thanks for the perspective. I agree. But reading your last sentence, I do not see the point. It is you who is saying that humanity will burn all the fossil fuels irrespective of climate change or peak oil. To what is the point of the last sentence? :-)

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  39. By Anon on July 25, 2010 at 11:19 am

    Apologies for this aside but this is prompted by your mention of a refining group above. FWIW, the coker unit at your former employment site looks dark and charred from I90. That must change refining economics and feedstock considerably.

    Big drums’ journey to refinery planned
    http://billingsgazette.com/new…..002e0.html

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  40. By Oxymaven on July 25, 2010 at 11:51 am

    Just remember that those subsurface “oil plumes” are simply the dissolved phase of the crude oil (not liquid oil), and that concentrations are all below 10 parts per million (or 0.0001%) from the NOAA current assessments. There is a lot of water with this dissolved phase, but don’t confuse it with ‘lakes’ of ‘oil’. If 10 ppm dissolved oil is Simmon’s worst case scenario, it’s pretty re-assuring that impacts are unlikely to be very horrible no matter what he or Rolling Stone say.
    One of the reasons to distrust the major mainstream media like the WashPost is because of their willingness to suggest people like Simmons have any credibility. In today’s WaPo article on the Deepwater Horizon, they include a prominent link to a YouTube Bloomberg interview he did earlier this week where Simmons is almost nonsensical in discussing current well pressures, and he repeats his claim of $1 trillion cleanup. Why would a presumably reputable paper like the WashPost want anyone else to look at such a completely bogus statement from someone who knows nothing about the science behind his claims? Clearly they don’t read this blog.

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  41. By rrapier on July 25, 2010 at 1:52 pm

    But reading your last sentence, I do not see the point. It is you who is saying that humanity will burn all the fossil fuels irrespective of climate change or peak oil. To what is the point of the last sentence?

    It makes a very big difference from the perspective of being able to transition to a low-carbon future without major disruptions. I do believe that we will eventually burn up all the fossil fuels. However, if we burn through them in a short amount of time out of desperation it will be a much different situation (from a peak oil perspective) than if we stretch that out over decades.

    RR

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  42. By Rufus on July 25, 2010 at 2:26 pm

    Somewhat o/t, but to prove MS wrong:

    Has anyone noticed that the only car left with a chance to win the $5 Million X-Prize is powered by E85?

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  43. By Alexander Ac on July 25, 2010 at 3:42 pm

    Hi Robert,

    again, I agree with the peak oil perspective. But you are probably aware, that the speed of fossil fuel burning is almost irrelevant for climate change. Unfortunately CO2 stays in the atmosphere for a long, long time.

    I also believe, that the speed with wich we furn oil (or coal) is determined by the price of these subastances. Carbon tax might help?

    Regards,
    Alex

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  44. By rrapier on July 25, 2010 at 3:57 pm

    But you are probably aware, that the speed of fossil fuel burning is almost irrelevant for climate change.

    But from a CC perspective, stretching it out would also give us a chance to come up with some sort of mitigation options. It buys us time. We know that if we burn them up shortly, it is all going in the atmosphere. If we stretch it out, we might find some reasonable sequestration options.

    But we need to maintain credibility in order to be taken seriously on any of this.

    RR

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  45. By Takchess on July 25, 2010 at 4:24 pm

    Rufus
    There is only one car left running in the 5 million traditional category. 4 seater which is the Edison Very Light Car. Under 700 lbs. I heard they made the over 100 mpg part of it.
    http://www.npr.org/templates/s…..=128652416

    I think the other category has a number of cars in the running for 5 million.

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  46. By Rufus on July 25, 2010 at 4:46 pm

    Thanks Takchess. I didn’t realize there were more than one $5 Million prizes.

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  47. By Alexander Ac on July 25, 2010 at 5:47 pm

    Karecha and Hansen et al. (2010) believe USA can phase-out coal emissions by 2030. In their abstract:

    “We conclude that U.S. coal emissions could be phased out by 2030 using existing technologies or ones that could be commercially competitive with coal within about a decade. Elimination of fossil fuel subsidies and a substantial rising price on carbon emissions are the root requirements for a clean, emissions-free future.”

    Whole article here:
    http://pubs.giss.nasa.gov/cgi-…..d=kh04000r

    Alex

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  48. By OD on July 26, 2010 at 2:03 am

    Karecha and Hansen et al. (2010) believe USA can phase-out coal emissions by 2030.

     

    LOL, give me some of what they’re smoking.

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  49. By MPG on July 26, 2010 at 10:10 am

    Emotions are a large, but unquantifiable part of life.  They can influence “facts” to a great degree. Americans hold a lot unrealized fear.  I think aging and health play a role.  Television news revels in it.   I think our former vice presidents actions were influenced by his health issues and fear of death.  Fear is useful if people use it plant a garden or reduce their driving.  If one can’t get to the nub of it can cause people to do nothing or make blunders.

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  50. By ndmaster on July 26, 2010 at 2:19 pm

    Hey dude- we did have a gas crisis after Ike. Nashville, TN and any place else headed East along that pipeline had about 10% of its normal gasoline supplies. Even when the refineries came back online, it took at least a week to get the gas pushed through the pipeline.

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  51. By rrapier on July 26, 2010 at 2:36 pm

    ndmaster said:

    Hey dude- we did have a gas crisis after Ike. Nashville, TN and any place else headed East along that pipeline had about 10% of its normal gasoline supplies. Even when the refineries came back online, it took at least a week to get the gas pushed through the pipeline.


     

    You are wrong about the timing. I remember the timing well, because I forecast those shortages about a month ahead of time. I can go back and find the link if you like. What had happened was that we let gasoline inventories get down very low, and I said “If there is a hurricane, we will start to see spot shortages.” Those were happening leading up to the ASPO conference where Matt gave his speech. Hurricane Ike made landfall in Galveston on September 13, 2008. Matt gave his speech a week later, and predicted a worsening situation going forward.

    But when Matt was giving his speech, inventories had bottomed out and refineries were coming back up. So what happened after ASPO was exactly the opposite of what Matt predicted. The situation got better, not worse. Look at Matt’s presentation and see what he was predicting. Or go back and listen to the panel session I was on and you will hear me predict that inventories/shortages would be improving over the next month.

    Here is a story from the week after Matt gave his speech in which he predicted a worsening situation:

    http://www.usatoday.com/money/…..ages_N.htm

    “We’re not going to be running out of gas, not even spot shortages,” he says. “There may be some stations that are running short on premium only. That will be corrected by the weekend. We are at the point now

    where we’re not just playing catch-up. We think that … (now) we’re going

    to have the luxury of building inventory.”

    That was exactly what I predicted in my panel session. I predicted it because I actually knew what was going on with respect to gasoline inventories. Matt made his erroneous prediction because he in fact had gross misconceptions about gasoline inventories.

    RR

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  52. By Rufus on July 26, 2010 at 5:05 pm

    This Bill makes a little sense: Apply VEETC Only to amount Over Mandates.

    http://ethanolproducer.com/art…..le_id=6865

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  53. By paul-n on July 26, 2010 at 5:11 pm

    From Rufus’ link about ethanol credit;

    “we’re simply paying for what is already mandated by law.”

    Hmm, sounds familiar -I wonder where I first read someone saying exactly that?

     

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  54. By Rufus on July 26, 2010 at 5:18 pm

    Yep

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  55. By Kit P on July 26, 2010 at 6:06 pm

    “LOL, give me some of what they’re smoking.”

    Can not say I was not warned but I opened the Hansen paper anyhow.

     

    “By contrast, more optimistic scenarios (e.g. ref 61) yield several-fold increases

    in U.S. as well as global nuclear power capacity by mid-century…”

     

    Hansen is another doomer that the media loves but has no credibility with me.  While I would like to see nuclear increase 10% and coal decrease 10%, building 50 new nukes over the next 20 is possible but a task of significant magnitude.  Building 100, wow!  Building 200?  Somebody has lost their mind.

     

    Because of his concern with AGW,  Hansen has become fanatical about coal.  To support his position, he publishes an absurd and unsupported journal pieces.  This opens the door to his credibility in his field.  Are there other theoretical physicists who disagree?  Yes, and some are famous for something other than being a doomer.

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  56. By Izzy on July 27, 2010 at 7:35 am

    Most of what Matt Simmons says about peak oil is correct and is still in the process of working themselves out. I don’t think that you understand what peak oil really is – a maximum in the flow rate of oil production in the world. There is no doubt that this is approaching in the next 2-5 years.

    As far as Twlight in the Desert – again you have no idea what you are talking about. Do you really think that the Garwar oil field in Saudi Arabia will go on indefinitely which is the largest field in the world – almost half of Saudi production?? And as far as the BP well blow out in the Gulf – do you really think that BP capped it completely now?? Go and watch video of the rig fire that happened and you will see a massive pressure release that probably blew the well casing and piping structure subsurface. This implies well fracture leaks on the ocean floor.

    Much of what Matt Simmons has yet to be played out including this BP episode. In my opinion I find much evidencs that the government and BP are not telling the full truth about the incident and they are hoping for a hale mary pass with the relief wells that just won’t come. One can only wonder what their claim will be that is causing oil to appear in the Gulf in scarry amounts. I think that you need to do more research on the peak oil issue and while you are at it look up the Export Land Model and how this will also affect oil supply in the future. See here – http://seekingalpha.com/user/2…../instablog

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  57. By J on July 27, 2010 at 11:28 am

    Izzy,
    I think RR understands exactly what peak oil is and even goes as far as to say he agrees with a lot of what Simmons says on the subject. You should read RR essays about peak lite. I think to give a time line of 2-5 years is silly-predicting when oil might peak has been a fool’s game. Nearly every major player in the peak oil community has made one failed predication and then went on to move the time line out about 2 to 5 more years.

    No one thinks the Ghawar oil field will last forever, however it still produces nearly 5 million bb a day and doesn’t seem to be slowing down. Your BP scenario seems almost silly. Much of what Matt has predicted has come to pass and was found to not be accurate. All RR is saying is maybe he should slow down on making over the top claims and focus on facts.

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  58. By Benny BND Cole on July 27, 2010 at 12:16 pm

    Izzy-
    Even if we do hit Peak OIl in the next five years–so what?
    Have you ever heard of Peak Demand? The price mechanism?
    Demand for oil in Europe and Japan has been falling for decades, even as living standards rise and they move to cleaner environments.
    Even so, higher oil prices might concentrate the minds of people who live in Libya, Iran, Iraq, Venezuela, Mexico, Nigeria etc etc to take advantage of their crude bounties. All the above nations have huge unexploited oil assets as they are run by monkeys and thugs. Peak Oil, for the foreseeable future, is a politicak condition, not a geological one.
    BTW, Ford is bringing a PHEV to market in 2012, and use of CNG to power vehicles is spreading globally.
    Peak Oil? Can’t come soon enough for me. I see a cleaner and more-prosperous future. Imagine living in a city sans ICEs. If I live long enough, it may happen in Europe and Japan–the USA will lag for a couple more decades.
    Are my predictions crazy? Really, more so than Matt Simmons? Given trends in Europe and Japan, I would say my predictions are far more sensible than anything Matt Simmons has ever said.

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  59. By paul-n on July 27, 2010 at 12:56 pm

    Benny,

     

    Unfotunately, living in California you are probably in one of the last places on earth that will give up cars.  

    But here’s a sneak preview of what LA looks like without cars – the cars have been raptured and the people are left behind!

     

    http://vimeo.com/11986171

     

    Agreed that peak oil can;t come soon enough.  The tragedy is that the US will not take any serious action until it arrives.  Much better to jump, before you are pushed, which is what Eu and Japan are doing.

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  60. By Rufus on July 27, 2010 at 1:57 pm

    I think I like our situation better than, either, the EU, or Japan.

    This deal is going to, I believe, shake out to biofuels; and we’re in much, much better shape than either of those outfits when it comes to ag potential.

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  61. By Benny BND Cole on July 27, 2010 at 2:22 pm

    Rufus-
    There is no way we can grow enough fuel without universal adoption of PHEVs and CNG.

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  62. By Benny BND Cole on July 27, 2010 at 2:27 pm

    Rufus-

     

    Imagine President Obama said he had an energy plan. He will convert urban waste streams into a liquid fuel.  This effort will consume a lot of energy, maybe as much as it produces.  It would raise prices of some commodities.  It will flow big money into urban areas–and you will see urban residents buying new homes and fancy cars.  Taxpayers will be forced to use this liquid urban fuel in their cars, they have no choice.  It mandated at 10 percent, maybe up to 15 percent, of all gasoline. The total federal subsidy (yes, subsidy and mandate) will be about $1.70 a gallon.

    I wonder how conservatoives would react to such a program.  Of course, I have just described out corn-ethanol program.

    I am an urban resident. I can’t believe how stupid we urban residents are.  We need to look to corn farmers to figure out how to really get the lard, and fleece taxpayers and consumers.

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  63. By Rufus on July 27, 2010 at 2:52 pm

    No, Benny, you Didn’t just describe ethanol. Not only, “not close,” not even in the same Solar System.

    You get in your car that’s powered by gasoline that’s made “Cheaper” by 10% Ethanol, drive down to the store to buy the Cheapest Food in the History of the World, then come home, get on your computer, and spend the rest of the day bashing farmers, corn, and ethanol. Very Strange.

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  64. By Rufus on July 27, 2010 at 3:19 pm

    BTW, about $5.4 Billion was paid out in Blenders Credits (to the oil companies, not the farmers, or biorefiners) in the last twelve months.

    If that ethanol you’re buying has a $1.70/gal subsidy, then only 3 billion, 176 million gallons of ethanol was subsidized. That means 8.824 Billion Gallons Weren’t Subsidized.

    Do you see how silly that sounds?

    The Blenders Credit (to the oil companies) is $0.45/gal, Benny. Going to $0.36/gal, and then less next year.

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  65. By rrapier on July 27, 2010 at 4:47 pm

    I don’t think that you understand what peak oil really is – a maximum in the flow rate of oil production in the world. There is no doubt that this is approaching in the next 2-5 years.

    Welcome, Captain Obvious. I can assure you I know what peak oil really is. I have written loads about it and given many presentations on it.

    Do you really think that the Garwar oil field in Saudi Arabia will go on indefinitely which is the largest field in the world – almost half of Saudi production??

    If I had a Hall of Fame for clueless posts, yours would be in there. Nowhere have I said or implied that Ghawar (not Garwar) could go on indefinitely. You should perhaps do a bit more homework before posting. The point is that this tendancy to make flawed but authoratative sounding arguments could even been found in Twilight. The fuzzy logic argument is a perfect example.

    And as far as the BP well blow out in the Gulf – do you really think that BP capped it completely now??

    Whether that job is complete is irrelevant to Simmons’ claims of a gusher seven miles away about to poison the gulf with methane.

    RR

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  66. By Benny BND Cole on July 27, 2010 at 5:00 pm

    Rufus-

    Oh, I forgot to add this this Obama urban liquid fuel that you are compelled to buy (at 10 percent of gasoline volume) actually…lowers your mpgs. Oh, that.
    Has for years. Imagine Obama announcing an energy program for a liquid additive that would lower your mpgs.

    Oh, the howling that would commence.

    Rufus–if ethanol is a great idea, then fine. Sell it on the open market sans subsidies or mandates, along with Obama’s urban liquid fuel.

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  67. By OD on July 27, 2010 at 5:22 pm

    LOL at poor Izzy trying to school RR. Now that is pure comedy!

     

    It’s pathetic when someone makes such an outlandish post on a blog and obviously has no clue who the blogger is.

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  68. By Kit P on July 27, 2010 at 6:12 pm

    Very Strange

     

    You might want to ask Benny
    what he pays for some other things. Sixteen years ago I was an urban
    dweller in California. Still have lots of friends and relatives
    there. I can even remember what it was like in 1960. California is
    paradise lost

     

    Since we have left
    California we have enjoyed clean air, low property taxes, excellent
    schools, and low energy cost among other things.

     

    One recent development is
    the ability to buy E10. As we drove west on vacation, I noticed that
    the price of gasoline was $0.50 higher in west coast states but did
    not have ethanol. Of course, I noticed this 40 years ago too.

     

    I do not pay much attention
    to peak oil or AGW. Mostly because there are more important things
    to worry about like mowing the lawn. Second because the doomers get
    old after 40 years. They have yet to be right. Third because I am
    aware of the general solution to such problems.

     

    We can make all the
    electricity we need with nukes. E10 may be a small step but it is a
    step that demonstrates part of the solution and it is an American
    solution.

     

    Take France and Japan for
    example. Those poor folks have no coal or any Iowas. Solutions to
    problems must take into account the location.

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  69. By Rufus on July 27, 2010 at 7:09 pm

    Benny, we will, soon, be buying ethanol with virtually no subsidies embedded. You won’t be able to say that of Petroleum. And, ethanol will Still be cheaper than gasoline (probably, by quite a lot at that time.)

    Oh, and there’s a reason why the only car left standing to claim the $5 Million Dollar X Prize runs on E85.

    In regards to the earlier post, the two “alternative” categories have $2.5 Million Dollar Prizes.

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  70. By Benny BND Cole on July 27, 2010 at 10:13 pm

    Rufus: Good, if corn ethanol really becomes subsidy and mandate free, then we can move to starting up Obama’s urban liquid fuel program, utilizing urban wastes. Let’s give it 40 years of mandates and subsidies.

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  71. By Rufus on July 27, 2010 at 10:20 pm

    Why not? We’ve given OIL a Hundred.

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  72. By Rufus on July 27, 2010 at 10:42 pm

    Ethanol will ALWAYS be “Mandated.” No way the oil companies would use it, otherwise.

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  73. By paul-n on July 28, 2010 at 11:19 am

    Rufus, you are missing the point here;

    Ethanol will ALWAYS be “Mandated.” No way the oil companies would use it, otherwise.

    The oil companies are not the actual users – that would be you and me and the collective drivers across the continent.

    The oil companies are merely the blenders, and they don’t have to be, it’s just that no one else is doing it at the moment. 

    There is nothing to stop any independent gas station from buying ethanol from POET and blending it themselves (and claiming the credit).

    There is nothing to stop POET from buying gasoline and blending it themselves (and claiming the credit).

    In fact, I don’t understand (maybe you know?) why POET doesn’t blend gasoline into its product to make it all E85, claim the credit on every gallon, and then sell it on, to be used either as E85, or mixed to E10.

    And here we have the nations second largest ethanol producer, Valero, coming out and saying they don;t need the VEETC;

    In an earnings call with investors, Gene Edwards, Valero’s Executive Vice President for Corporate Development and Strategic Planning, was asked about implications for the company if the VEETC is removed.  What was his response

    From an ethanol manufacturing perspective, he said, the VEETC is “almost irrelevant today” and “doesn’t factor into our ethanol plant economics”.  Because ethanol today is trading at $0.30 cents below the price of gasoline, blending margins already favor blending ethanol with gasoline and so blenders are capturing 100% of VEETC value, not ethanol plants. Ethanol prices, he said, would remain the same without the credit, and Valero would still have profit margins of $0.30 cents per gallon, “whether the credit is there or not”.

    Now, your point is still that they wouldn’t buy any ethanol unless mandated to, but is that really true?

    In 2005, the year the mandate came in the ethanol industry already produced 3.9bn gallons a year, no mandate required.  Now, since then the industry as tripled, but what would it have done without the mandate?  It would certainly have grown, the auto makers would still be making flex fuels and people like you would still be driving them, so there ethanol inbuustry would certainly have grown, say 50% to about 6bn gal/yr.

    But without a mandate, who then has the incentive to “use” ethanol?  How about the people of the corn belt?

    The states of Arkansas, Indiana, Iowa, Kansas, Nebraska, Missouri, N and S Dakota collectively use about 13bn gallons of gasoline per year.  This could be replaced with 17bn gal of ethanol, which is 50% more than the industry size today.

    Do the people of these states want to give their (hard earned) fuel dollars to oil companies, or corn farmers and ethanol producers?  Do POET and ADM want to sell more ethanol without the cost of transporting it?  Do these states have any desire to move themselves towards oil independence.

    I think there is plenty of potential for the “use” of ethanol without a mandate (or even a subsidy).  If both of these were taken away, then Poet, ADM, Valero, etc would have to get a bit more enterprising about developing the market for their product.

    It’s not that it can’t be done, it’s just that it is easier and more profitable to have a government mandate requiring the use of the product.  Nobody “requires” the use of gasoline, the oil companies just developed (very aggressively) their market.  The ethanol industry should do the same.  If they developed and marketed as aggressively as they lobby, they wouldn’t need to lobby, as they would already be selling more than they do today.

    How much fuel and ethanol, gets used is ultimately up to the drivers.  The ethanol industry can bypass the oil companies altogether, if they choose, but so far the industry has not stepped up to the plate.  If John D. Rockefeller was running the ethanol industry, he sure wouldn’t be trying to grow it by selling through the oil companies!  

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  74. By carbonbridge on July 28, 2010 at 1:43 pm

    Paul N said:  Rufus, you are missing the point here;

    Ethanol will ALWAYS be “Mandated.” No way the oil companies would use it, otherwise.  If John D. Rockefeller was running the ethanol industry, he sure wouldn’t be trying to grow it by selling through the oil companies!  


     

    Paul:  I agree with you.  Profits drive industries, not gov’t mandates.  And Rufus (plus millions of other global citizens) mistakenly visulize that in order to produce an alternative fuel of any kind – that something needs to be planted, fertilized, watered, weeded and harvested via the agricultural community.  Not so at all.  This is the most obvious misconception about fuel alternatives beginning with fermented corn or sugar cane ethanol.

    Carbon is carbon is carbon as a basic fuel building building block and ole’ J.D.R. would be focusing on how to utilize less expensive carbon obtained from a host of different sources entirely, even petroleum coke waste residues from oil refineries.  Next his engineers would simply apply a well-known change of processing tactics via thermal steam-driven chemistry sets — instead of inefficient batch processing methods using enzymes and bio-bugs as the process drivers. 

    Why? 

    It would make the Standard Oil Company tons more money. 

    J.D.R. could choose F-T to produce expensive and clean – albeit float-on-water oils OR he could choose Methanization GTL to produce water soluble, biodegradable higher mixed alcohols which are 20% stronger BTU than corn ethanol.

    Again, profits alone would dictate this choice for him.  J.D.R. probably wouldn’t be worried about industrial emissions, vehicular emissions or resulting climate change phenomena.  The first green is the money.  The second green might become near-term environmental improvements effecting the lives of both terrestrial and oceanic inhabitants…

    -Mark

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  75. By Scott Burrow on July 29, 2010 at 2:50 pm

    Hey Robert,

    Since he is an investment banker, when he said the BP’s stock was going to be insolvent and would zero out, did he mention how alot of British retirement systems are heavily dependent on BP’s stock. Needless to say, if BP’s stock completely fails, those British retirement systems are in trouble. Therefore, due to the political ramfications for both England and the U.S., I don’t see the two governments allowing the stock to fail. Yes, it will and has take a good hit, but I don’t see it failing anytime soon. Also, over time, I see BP’s stock slowly rising back up.

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  76. By Paul on July 30, 2010 at 12:51 pm

    Great to hear people finally waking up to what a whack job Simmons really is.  How that old fool investment banker managed to get himself branded as an insightful “expert” on energy is a testament to people only listening to what they want to hear and the penchant of the press to gravitate to sensationalism over science or facts every time.  Even that moron GWB had Simmons as part of his “energy advisory team” – with “experts” like that offering opinions, is it any wonder why the US energy policy is so dysfunctional?  

     

    TITDesert was a crock of chit as anyone paying the slightest attention to detail knew from the start.  The book was a conspiracy theory telling us that OPEC had grossly misstated reserves and big(gest) fields like Ghawar were in imminent danger of collapse.  That he based his “science” on 30 year old data (ie before modern seismic, modern modelling, modern drilling, modern completion techniques) was absurd.  That “data” said Ghawar should have died (not just declined) by ~2000.  Yet Ghawar is still happily producing ~5MM bpd – so far producing ~15B bbls more than Simmons’ data said was possible.  Once you spent 5 minutes and figured out everything else he was saying was based on his absurdly incorrect “data”, the rest of his book was little better than badly written children’s fiction.  

     

    I’m pleased that Simmons’ latest comments about the GOM blowout are so extreme that even the most uninformed now ask what planet the guy is from.

     

    And it will be funny to see Simmons pay up his share of his infamous bet with the NYT that oil would average $200 bbl this year.  The excuses/rationlizations of why oil is $75 with ~4-5MM bbls excess supply will be most interesting, particularly since Simmons said it was impossible and that oil could easily be $500 bbl by now (in itself an amazingly incompetent statement showing the old fool has no idea that the world economy would enter recession long before that happened, dropping demand and pulling prices back down, which is exactly what did happen).

     

    My only problem with your blog is that you pulled too many punches.  Incompetent media whores like Simmons need to be hounded out of the debate with as much scorn and derision as we can muster.  And a blog every few years isn’t sufficient to overcome the nonsense that gets spewed – reading many of the amazingly ignorant comments to your blog is proof positive…

    Keep up the good work.

     

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  77. By Lowell on August 1, 2010 at 2:14 am

    Robert,

    Nice post. One more point to note about Simmons’s motives and agenda for scaremongering about the oil spill: he is getting into the wind energy business. See this interview for example:

    http://www.portfolio.com/compa…..ng-on-wind

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  78. By Kit P on August 1, 2010 at 2:34 pm

    What is it about old guys
    who make a fortune in the oil industry make them think that making
    electricity is easy.

     

    “The ocean-energy stuff is
    not really capital intensive, and it’s clean and it’s safe.”

     

    It sounds like Simmons is
    trying to get in touch with his inner child. It is hard to tell if
    Simmons is naïve or just telling the press what they want to
    hear.

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  79. By Steven Gail on August 5, 2010 at 5:58 am

    I agree with the comment at the end of the article that the onus of responsibililty is also with media companies who need to do more than look at a resumé, find the phrase “years in the oil industry” and assume a person is an expert in the entire field. They need to peel the onion back further than a Google search and realise that, in all industries, not just the oil industry, there are massive areas of specialisation. This entire episode has seriously degraded my trust in US news outlets and the sources they use.

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  80. By Kit P on August 5, 2010 at 9:08 pm

    Steven Gail said:

    I agree with the comment at the end of the article that the onus of responsibililty is also with media companies who need to do more than look at a resumé, find the phrase “years in the oil industry” and assume a person is an expert in the entire field. They need to peel the onion back further than a Google search and realise that, in all industries, not just the oil industry, there are massive areas of specialisation. This entire episode has seriously degraded my trust in US news outlets and the sources they use.


     

    Steven how old are you, 12?

     

    The reason I ask is that the
    rational part of the brain turn on about 12.

     

    I do understand. I voted
    for Jimmy Carter. I was over 25 and a navy officer.

     

    To be honest, I do not know
    if news outlets have become lazy in their reporting or if I have
    become more skeptical. It would interesting to go back and read old
    issues of Time and Newsweek to see how accurate reporting was.

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  81. By J on August 9, 2010 at 2:16 pm

    …and now he suddenly dies…

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  82. By Trev16 on August 10, 2010 at 11:39 am

    Was Matt Simmons perfect? Obviously not. However could he be right on the evacuation? It’s hard to say but all I can say is that I do not trust corporations or the government…..example using corexit.

    As everyone knows this is toxic and it is already in the food chain. Thus just like the 9/11 rescue workers there will be thousands perhaps millions of people who are dying as a result of BP using it.

    If this comes true over the next couple of years, how does this effect BP’s stock price?

    In terms of Matt Simmons $200 a barrel oil prediction? Let’s just wait to see what happens to the price of oil when the events with Iran develop later this year.

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  83. By Helga Vierich on August 10, 2010 at 9:41 pm

    I do not think that Matt Simmons was a shill, or a media whore, or after money. that is slander. I do not think that his information was made up. For instance, regarding the “oil lake”he reported in the Gulf, he was basing this on the following information and other similar reports from research vessels “http://energyandenvironmentblog.dallasnews.com/archives/2010/08/peak-oil-activist-matthew-simm.html”>l The fact that the stuff is mixed dispersed oil and floating deeper int he water is exactly would be expected. Check your facts before calling the guy names.

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  84. By rrapier on August 11, 2010 at 12:55 am

    Helga Vierich said:

    I do not think that Matt Simmons was a shill, or a media whore, or after money. that is slander.


     

    Helga, I am not sure whether your comments are in response to the article, or to another reader’s comments. But I was quite clear that I was not speculating on Simmons’ motives.

    I do not think that his information was made up. For instance,
    regarding the “oil lake”he reported in the Gulf, he was basing this on
    the following information and other similar reports from research
    vessels
    “http://energyandenvironmentblog.dallasnews.com/archives/2010/08/peak-oil-activist-matthew-simm.html”>l
    The fact that the stuff is mixed dispersed oil and floating deeper int
    he water is exactly would be expected.

    First, I don’t see anything at the link relevant to what you are suggesting. Second, I know where he got the information. But it was misinterpreted and blown completely out of proportion. But an underground lake of oil is very different than plumes that are slowly rising to the surface.

    Check your facts before calling
    the guy names.

    Again, not sure who you are talking to, but my facts are correct and I didn’t call him any names.

    RR

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  85. By Kathy on October 14, 2012 at 10:07 am

    Weird how this poor man is dead now, after reading all this.  Also weird how now we have this growing sink hole in Louisiana full of crude oil.

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