Re: T. Boone Pickens seems to agree with Glenn on oil production

You're right, T. Boone and Glenn both make many of the same points.

As for what future oil prices will be, given the historical price volatility of this commodity, it would not be at all surprising for T. Boone and BP's chief both to be right. In fact, I would be mildly surprised if oil did not both fall to less that $40 a barrel and rise to more than $100 over the next 10 years. China's rapid growth has been defying gravity for years. If their economy and the US economy were to experience hard times simultaneously, the resulting big drop in demand would lead to a big drop in price. How likely is it that these economies will continue to grow rapidly for another 10 years? As for the high side, how likely is it that some political problem will disrupt the flow of oil from the Middle East and cause a price surge? After all, $100 a barrel is less than twice what it's going for now. For the longer term it seems inevitable that oil prices will go much higher than they are now--but how high is anybody's guess. Almost certainly higher than the price of bottled water.

Whose longer-term predictions are more likely? All those in the know recognize that the quantity of oil is finite and that easily producible oil is running out. What they disagree on is whether the landing will be soft or catastrophic. It's a fact, however, that alarmists have had a poor record over my lifetime, and this is part of the reason I've been taking a cautious stance on this issue of late. The only true world-class catastrophe since the 1930s was World War II, and at least one highly placed figure had predicted "peace in our time." Since then we've been urged to fear nuclear annihilation (still possible, but nobody takes it as seriously as they used to), world running out of food, Japan's economic dominance to the detriment of the US, Y2K calamities, etc. And now global warming, and also the export of good US jobs to China and India. There have always been crucial elements in the scheme of things that the alarmists have failed to take into account. Perhaps the optimists' ideas have at least some merit. Or perhaps this time will be an exception, the alarmists will be right, and we really will have a catastrophic energy shortage.

The alarmists are making a big issue of the Saudis' capabilities. It will indeed be significant if the Saudis can't raise production as they claim, and it will be equally significant if they can.

On the optimists' side, it's encouraging that resurrection of nuclear and expansion of coal are getting more frequent and favorable mention in the press.

So what's the average guy to do? I say, come out in favor of conservation and the search for alternatives whenever the opportunity presents itself. No matter whether the landing is hard or soft, the world is going to miss easily producible petroleum and natural gas.

Don

  ----- Original Message -----
  From: Joel Cannon<mailto:jcannon@jcannon.washjeff.edu>
  To: asa@calvin.edu<mailto:asa@calvin.edu>
  Sent: Monday, January 16, 2006 4:16 AM
  Subject: T. Boone Pickens seems to agree with Glenn on oil production

  Hi Folks:

  NPR interviewed T. Boone Pickens, well-known in 70's for taking over
  oil companies. I expect that you could find the interview on the NPR website. I
  missed the start but did hear him say that he thought oil prices would
  not go down, that present production could not be increased, and that
  oil prices would be over $100 barrel in 10 years.

  The interviewer pressed him about what several petroleum executives
  have said, particularly BP's chief who predicted that oil would fall
  back down to $40/barrel. His statement was something like, "I don't
  know how oil executives think."

  --

  ------------------------------------------------------------------------------
  Joel W. Cannon | (724)223-6146
  Physics Department | jcannon@washjeff.edu<mailto:jcannon@washjeff.edu>
  Washington and Jefferson College |
  Washington, PA 15301 |
                                       
                      
Received on Tue Jan 17 11:23:33 2006