FTW: We are
currently in a plateau area of oil production. Jean Laherrere has detailed the
“bumpy plateau” of oil production, and FTW has recently written about this.
Professor Michael T. Klare says this plateau could last “a decade or more.”
What do you think about that?

 

Matt Simmons: It’s
so hard to try and accurately predict this. But what is easy to predict is the
fact that there is just no way – with the limitation we have of oil
rigs compared to projects – to keep supply growing: That’s an
impossibility. But to stabilize the base for some period of time – if
we didn’t have such an incredible limitation of drilling rigs that would take
at least a decade to correct – I think that would probably be possible. But
given the fact that we are not going to have significantly more rigs for at
least another decade, and how old the fleet of rigs is, the size of the fleet
is going to drop before it goes back up. I’d say sustaining the base for 5 or
10 years is not impossible but extremely long odds.

 

FTW: I saw you
speak in Crystal City recently, but FTW did not publish a report after that
because, unfortunately, our offices were burglarized 5 days later and we spun
into turmoil. At this speech you brought up a number of ideas that I would say
are radical including; 1) liberating the work force, 2) having people live and
work in “villages,” and, 3) changing the way we ship goods to the degree that
we have to ship them, among other suggestions. Little-to-none of this is being
addressed today at this conference. Are we nearing the point where conferences
such as these that focus on the problem might be irrelevant or may need to be
updated?

 

MS: First of all
we won’t implement any of these changes until our back is against the wall and
we realize that we have to. These aren’t things that people say, “OK, 1-2-3,
let’s jump in the lake!” I think it’s so important that we educate people that
this is coming. I liken this to almost every major war. We could have
prevented it five years before it started, but all of a sudden you realize
we’re beyond the tipping point, and now we’re at war.
 
What’s
interesting is that liberating the workforce is actually in motion right now
in Houston, Texas. Our Mayor has initiated a program in September called “flex
in the city.” It’s all about flexible work rules and recognizes companies that
figure out programs to start this. It’s really addressing Peak Traffic. Our
highways have been expanded as much as they can be and it won’t work anymore.
Unless we create a flexible work force and stop this compulsion of
long-distance driving, Houston doesn’t have a future. And it’s amazing how
popular it has been, and company leadership is saying that this is really a
good idea. This is the easiest to do because it’s basically just a mind state
change. The key to it is basically paying people by productivity instead of 9
to 5.

FTW: In
Crystal City you also said that there needs to be an “end to globalization,”
but that this is harder to do than the other suggestions you gave. Do you have
any ideas about how we can address this, and if you don’t, can you at least
speak to this?

 

MS: Well by
globalization I don’t mean talking to someone in India by telephone. What I
mean is the concept that we can get increasingly inexpensive things to
purchase because we broke them apart into the simplest unit and we found the
cheapest sweatshop economy in the world to have it built in and then we
basically ‘zing’ the parts around until finally you’ve built a car. And the
energy used up in doing that wasn’t even thought about but it was one more
element that gave rise to this astonishing rise in oil demand over the last 15
years. When we finally have to start shrinking the supply we’re going to have
to do without something. One of the easiest things to do without is to stop
this process in its tracks and start building things very close to where they
are used. But none of this will happen until it has to – not until there is a
crisis.