from Policy Pete [http://qv3.com/policypete/background(2).htm], writing about a Matthew Simmons paper at http://www.simmonsco-intl.com/web/downloads/whitepaper.pdf which I mentioned in an earlier posting "Everyone thinks they understand the oil markets, but few really do. It takes more than a terminal into NYMEX and this week's API inventory data. One person with a relatively good claim is M. Simmons from Simmons & Co. He's been a significant industry analyst for a long time and Pete finds some of his more recent papers really interesting, even though his clients in the oil fields services business would certainly benefit if he's right. Unfortunately, many of the interesting bits* are buried in 50 pages of this or that. So follow the title link to a comparison between 1973 and today: [http://www.simmonsco-intl.com/web/downloads/whitepaper.pdf] Read the history if you don't know it, but pay particular attention to his analysis of the present (pp. 42 et seq.). "The reality of the world�s oil production base as we begin the 21st century is that all the super giant fields are now very old with high water cuts and steep decline curves absent extensive drilling / secondary recovery programs. The industry found no super giant fields post 1967/68 and only a handful of giant fields post 1973. Moreover, most of these giant fields are now mere pygmies through rising decline rates. .... [Exploding demand] leads to a world needing an additional 40 million barrels of oil equivalent ("BOE") by 2010, plus a probable 80 million BOE per day to replace the oil and gas production lost by an estimated 10% per annum natural decline rate ..." Simmons answers the title question in the affirmative. His view is that prices are going to continue to rise. " *He also covers the notable, compound errors in IEA data that helped convince observers that a glut existed 18 months ago. (See p. 39)
