Matt Simmons - If Oil Demand Grows More Than 1.5 - 2.0% In 2008 Over 2007 Levels, Look For Slowdown

[hatrack]

If oil demand in 2008 rises 1.5% to 2% above 2007’s level, global economic growth will stall unless oil production quickly climbs into record territory. That’s the dire outlook from Matthew R. Simmons, chairman of the Houston-based energy investment banking firm Simmons & Company International.

Simmons is the financial world’s most respected proponent of the school of thought that the world has hit an oil production “peak.” Until this year, peak oil advocates were generally dismissed by governments and in the media in favor of private and government analysts more in line with the oil industry’s own more optimistic assessments. But recent articles in the Wall Street Journal and elsewhere suggest the tide is turning. Indeed, Simmons’s 2008 prediction is disturbingly similar to one just issued by the U.S. government’s own energy forecaster.

The Energy Information Administration’s (EIA) most recent short-term forecast concluded that global oil markets will remain tight. EIA said world oil demand will grow much faster than non-OPEC supply, leaving OPEC to make up the difference. EIA indicated this may not happen because, contrary to Western experts, the cartel believes the world is well-supplied, a position that may or may not be camouflage for the cartel’s inability to further significantly raise production.

Simmons told EnergyTechStocks.com that if demand rises 1.5% to 2%, unless crude production quickly rebounds to its peak set in May 2005 and then keeps growing in step with demand, the world will draw down stocks to the point “where shortages stop further growth.” (Inventory levels in parts of the world are already low.)

EDIT

http://energytechstocks.com/wp/?p=694

[Deja Q]

1. In short, invest in oil because they're setting themselves up for the most profits ever?

[MindMatter]

2. The cruel reality nobody wants to talk about

Most of the rise in oil price is because of the lack of confidence in the dollar. Other nations are still confident in our ability to maintain a viable currency, but 7 years of Bush economics, on the heels of the Clinton jobs sellout has left our currency much less valuable than before.

This isn't really very complicated. If you have oil and the currency you use to transact trade drops significantly in value, then you will require more of that currency.

And there is nothing on the horizon to change this. We are still exporting our best jobs like crazy. We are still buying Chinese crap like crazy. We are still importing oil as fast as we ever have. China and Dubai are still lending is the credit to finance this lifestyle.

This is the reckoning.