Energy Banker Matt Simmons Warns on Threat of Gasoline Shortage
04 October 2008
In an interview with WorldEnergy.TV, Matt Simmons, Chairman of Simmons & Company International, warned of the danger of a gasoline supply crisis to the US economy.
Congress should realize we have two diseases crippling America today. While the financial crisis is like asthma or tuberculosis to the economy, a gasoline supply crisis could be terminal cancer. The government can print more money but gasoline is a hard asset. If we drain the pipelines, we won’t be able to drive; if we don’t ban driving we could run out of food within 5-6 days and face the greatest crisis in the history of the United States.—Matt Simmons
Because prices have plummeted from a high of $140 a barrel, Simmons thinks we have created the impression that the oil supply problem is solved.
We know gasoline is in short supply but we really don’t have an idea as to how widespread the shortage is, when in fact it may be hemorrhaging. We don’t have a Strategic Petroleum Reserve for finished gasoline. If Americans were to suddenly top off their tanks, gasoline supplies worsen and it takes more than 120 days to refine Middle East crude, transport it to US refineries, transfer finished gasoline via pipelines at 4 mph to markets already in short supply like Atlanta, Nashville, Richmond, Baltimore, Charlotte, and along the Northeast.—Matt Simmons
Product deliveries are far more dependent on diesel than gasoline. Very few commercial vehicles use gasoline. A gasoline disruption is much more a problem for consumers as illustrated by the recent post hurricane difficulties in Atlanta.
Posted by: Bill Young | 04 October 2008 at 03:38 AM
Public transit grows ever more important.
Posted by: richard schumacher | 04 October 2008 at 07:23 AM
if it is a refinery or a crude supply problem, then all distillate products are going to be in short supply. public transportation is no solution because 1) buses are dependent on gas/diesel, 2) public transit only works if you have sufficient population density or can force the population into transit regulated lives.
the first problem can be reduced by converting buses to cng. the second can be reduced by massive construction projects and forcing people to move into cities near their jobs. a transit regulated life can will work if one person works and the othe takes care of household errands when public transit is running.
remember, there isn't a single energy problem that can't be solved by eliminating choice in how and where people live.
Posted by: country mouse | 04 October 2008 at 08:53 AM
The thing is, prices of gas are artificially reduced just to make the election swing in favor of OIL ... If they run out of gas, the wheels fall off their entire election strategy.
Posted by: John Taylor | 04 October 2008 at 09:25 AM
I just watched that interview with Matt Simmons. He knows there is a problem but has NO idea how to fix it.
The offshore wind turbines for Maine are a fabulous idea. The second suggestion of turning Maine to electric heating is a super idea. Now comes the clunker, making ammonia to use as fuel. It works as fuel, but this stuff is totally toxic in concentration. This is a seriously bad idea from a safety point of view.
Now if they were recommending battery electric cars as the transportation of choice with ammonia or hydrogen used as a power storage medium, then we have a plan.
Posted by: John Taylor | 04 October 2008 at 10:06 AM
Simmons' book was good, he knows what he is talking about. I foresee not only $5 gasoline, but shortages as well. The only way out of that bind is to use less. One way to use less is a 60 mph speed limit and the other is rationing. Both of these ideas are not liked by many people, but they are better than gasoline lines and not getting to work.
Posted by: sjc | 04 October 2008 at 12:05 PM
Yeah - OPEC cuts production and the oil prices go down ($90/b). Does anyone really think OPEC is in the tank for a US government intent on lowering imports and INCREASING domestic drilling??
And there are UFOs based in the Arctic.
Posted by: debunker | 04 October 2008 at 05:33 PM
The facts are Matt Simmons is an M&A (Mergers and Acquisitions) specialist who brokers oil and gas company take-overs. He's also a Texas Republican and Bush Admin. oil Adviser. His specialty is leveraging the assets of the oil & gas business and he makes money when those assets change hands. As oil prices rise, so do the fortunes of his clients (nearly all oil and gas)and the greater the target value. His web site claims Simmons has done over $40B in takeovers since 1993. Here are a few of their clients traded in 2007:
Laredo Energy III, L.P.
EnergyQuest Resources, L.P.
Jones Energy, Ltd.
Escondido Resources, L.P.
Chalker Energy Partners II,
Plantation Petroleum, L.P.
AmeriGas Propane, L.P.
Targa Resources, Inc.
Time Oil Company
Lubrication Systems Company
Jetstar Energy Services, Inc.
Mobley Oilfield Services LP
Energy Equipment Corp.
Hercules Offshore, Inc.
Who here is going to believe a word from the mouth of this guy? If you do you play into the hands of oil who profits off your panic. Doh!
Posted by: fakebreaker | 05 October 2008 at 12:59 PM
"the second can be reduced by massive construction projects and forcing people to move into cities near their jobs. a transit regulated life can will work if one person works and the othe takes care of household errands when public transit is running."
And let's not forget the bar-code tattoos on the forehead. This way people can be auto-sorted into the proper rail cars - some for Treblinka, others for Dachau, etc.
Posted by: fakebreaker | 05 October 2008 at 06:39 PM
It is surprising the language that some apparently well intended people use is suggesting change. They should be aware that the notion of forcing people to do one thing or another makes them sound dangerously fascist. With the Holocaust 60 years behind us - we would expect the environmentalists to be a little more aware of how the real world perceives them. Forcing people to do anything usually fails. Attraction however has continually shown great success in achieving social change.
Posted by: gr | 06 October 2008 at 09:24 AM
Posted by: Reality Czech | 06 October 2008 at 10:51 AM
Anyone can write a book that will help them exploit the marketplace. Look at Al Gore's CO2 fantasy prompting his billion dollar "Cap and Trade" investment operation. Charlatan thieves the lot. Hopefully the next Administration will clear the whole rotten pack out.
Posted by: fakebreaker | 06 October 2008 at 12:34 PM
I saw a while back that world supply was 83 million barrels per day, but world demand is 86 million barrels per day. Things may slow down with the world financial situation, but that is just a breather.
OPEC can just cut production to keep supply under demand and the price up. They are getting 4-5 times the price that they used to. There is plenty of room to move and still get revenue.
Posted by: sjc | 06 October 2008 at 09:51 PM
So why did oil shoot up to $150.00 a barrel? Yes it is down today, however, at $85ish it is still more than 2007. Let me guess ... it is all the spec trade. HA. When was the last time you head of a 100,000 BOE / day of production field?
Posted by: dd | 07 October 2008 at 03:12 PM
So why did oil shoot up to $150.00 a barrel? Yes it is down today, however, at $85ish it is still more than 2007. Let me guess ... it is all the spec trade. HA. When was the last time you heard of a 100,000 BOE / day of production field?
Posted by: dd | 07 October 2008 at 03:13 PM