Simmons reveals energy surprise of 2005
Jaime Kammerzell
Gulf of Mexico Editor
Offshore
Matt Simmons, Simmons & Co. International CEO, revealed to lunch attendees at the Offshore Technology Conference on May 2 the big energy surprise of 2005 – all the energy surprises should not have been surprises.
The surprises he refers to include spiking oil and gas prices, decreasing rig count, flattening of supplies, increasing energy demand, and diminishing spare capacity, among others. Simmons explained that had analysts properly conducted studies, they would have seen all of the surprises on the horizon.
He pointed to oil use as a starting point to ease the demands on our supplies. Simmons suggested using more rail transportation to alleviate traffic congestion, which is an enemy of consumption. He also proposed looking closer to home for food supplies needing refrigeration. Simmons used an example of a European country importing apples from New Zealand. The energy needed to refrigerate apples traveling across the world could be eliminated by growing apples in orchards much closer to home.
Simmons said, "prices have to go way up for us to address the problem. 'Way up' is easily the triple digits; $60 is not expensive. When prices go high enough, we'll create new forms of energy we may not even know about now."
One example he offered was an alternative to ethanol. Switch grass could be the energy source of the future as it is a renewable form of grass that does not take nutrients out of the soil.
05/02/05