Oil prices may double in three years, analyst says
One of the world's leading energy analysts on Monday called for an independent assessment of global oil reserves because he believed that Middle Eastern countries may have far less than officially stated and that oil prices could double to more than US$100 a barrel within three years, triggering economic collapse.
Matthew Simmons, an adviser to US President George W. Bush and chairman of the Wall Street energy investment company Simmons, said that "peak oil" -- when global oil production rises to its highest point before falling irreversibly -- was rapidly approaching even as demand was increasing.
"This is a new era," Simmons told a conference of oil industry analysts, government officials and academics in Edinburgh. "There is a big chance that Saudi Arabia actually peaked production in 1981. We have no reliable data. Our data collection system for oil is rubbish. I suspect that if we had, we would find that we are over-producing in most of our major fields and that we should be throttling back. We may have passed that point."
Simmons told the meeting that it was inevitable that the price of oil would soar above US$100 as supplies failed to meet demand.
"Demand is pulling away from supply ... and we have to ask whether we have the resources that we think we do. It could be catastrophic if we do not anticipate when peak oil comes," Simmons said.
The precise arrival of peak oil is hotly debated by academics and geologists, but analysts increasingly say that official US Geological Survey estimates that it will not happen for 35 years are over-optimistic.
According to the International Energy Agency, which collates data from all oil producing countries, peak oil will arrive "sometime between 2013 and 2037," with production thereafter expected to decline by about 3 percent a year.
While oil from conventional sources is expected to decline, more and more is expected to come from "unconventional" supplies found in oil-rich rocks, especially in the US and in deposits of tar found in Venezuela.
The former UK energy minister, Brian Wilson, said that Britain would be unwise to rely completely on importing gas from politically sensitive countries as North Sea reserves declined. But he added that global reserves were not overestimated.
"The concept of peak oil needs to be taken very seriously indeed, [but] my working assumption is that both global oil and gas reserves continue to be significantly underestimated," he said.