Simmons, Matthew R.
Simmons, Matthew R.
ADDRESSES: Office—Simmons & Company International, 700 Louisiana, Ste. 5000, Houston, TX 77002.
CAREER: Simmons & Company International, Houston, TX, founder and chief executive officer, 1974–. Served as energy advisor to President George W. Bush.
Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, John Wiley & Sons (Hoboken, NJ), 2005.
SIDELIGHTS: Matthew R. Simmons is an investment banker whose focus has been on the oil and gas service industry. Since he founded his company, Simmons & Company International, in 1974, it has grown to become the largest investment banking firm serving the energy industry. Simmons predicts the future of oil availability and its impact in Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Here he provides a background of American dependence on Saudi oil and the supply of world energy, then he evaluates Saudi supply, providing a field-by-field analysis. For his information, he has drawn on papers presented by engineers of Saudi Aramco and its predecessor, Aramco, which are held by the Society of Petroleum Engineers and which are published online at their subscription site. His basic thesis is that Saudi oil is not an unlimited resource. He writes that the aging fields and related geological changes are a subject for concern, especially since new fields will not be discovered to replace them. Simmons feels that the world has reached its peak oil production, or soon will. Aramco and others disputed Simmons's theory, but many oil experts agreed with him. Other factors that may influence oil availability are the fast-growing Saudi population, which may demand a rise in oil prices for its support; Asian growth that will compete for oil, particularly in China and India; and the political instability of the region.
John Gray wrote in New Statesman that "Simmons makes a formidable case for the pivotal importance of Saudi Arabia, but he may actually have understated the impact of peak oil." As Gray noted, oil is the basis for agricultural products, including fertilizers, pesticides, and herbicides. Without them, food output per acre would drop. "The energy-intensive lifestyle which is now spreading throughout the world cannot be sustained with non-renewable and polluting fossil fuels," asserted Gray, "but it is sheer fantasy to imagine that a human population of between six and eight billion can be supported on a combination of windfarms, solar power and organic agriculture. As Simmons notes, we may be approaching the limits of growth that the Club of Rome identified more than thirty years ago, and we are no better prepared to adjust to them now than we were then."
Simmons commented in a Time article that while the global need for oil may reach 120 million barrels a day two decades in the future, in actuality only half that number may be produced. Simmons advocates for conservation measures as the world grapples with the energy problem. He wrote that instead of moving people and goods by cars and trucks, a global rail system should be built, and that further energy savings could be realized by shipping by water rather than rail. He argued that while drilling in the Arctic National Wildlife Refuge and the outer continental shelf for oil and natural gas may buy time, this strategy will not cure the problem. In his book Simmons proposes that more work be done remotely by employees working from their homes, using modern technology and thereby saving the energy necessary to commute. He also stresses the importance of growing food closer to the markets where it will be consumed.
Simmons's message is that, although none of these steps would be difficult to accomplish, implementation must begin now. "If a master plan is quickly adopted on a global scale," he wrote in Time, "the world can safely cope with a peak in oil production and create a more sustainable and enjoyable economy at the same time. If we ignore these changes and peak oil does occur, the unforeseen consequences could create a far darker world."
BIOGRAPHICAL AND CRITICAL SOURCES:
Booklist, August, 2005, Mary Whaley, review of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, p. 1976.
Business Week, August 1, 2005, Stanley Reed, review of Twilight in the Desert, p. 104.
Middle East, August-September, 2005, Fred Rhodes, review of Twilight in the Desert, p. 65.
New Statesman, July 25, 2005, John Gray, review of Twilight in the Desert, p. 48.
Petroleum Intelligence Weekly, June 6, 2005, review of Twilight in the Desert, p. 6.
Time, September 26, 2005, Matthew Simmons, "The Real Oil Shock," p. A18.
Simmons & Company International Web site, http:// www.simmonsco-intl.com/ (November 17, 2005).
Washington Post Online, http://www.washingtonpost.com/ (August 4, 2005), online chat with Simmons.