DAVE TO SIMMONS | 2007-11-15
Simmons,
I am often in settings where what I call the "local command" shows up (e.g., judges, city and State officials, senior bureaucrats), but also through my family I have sometimes have access to senior oil company executives, key industry lawyers, etc.
But through my professional work I also often find myself with C-level people of prominent foundations and charities and NGO personalities and figures. For example, recently I was able to meet the senior executive heading up the NGO providing America's contribution to relief of the refugees from the fighting in Dafur.
These are lily-white venues. The occasional nonwhites in them do not mean anything. These venues are full of aggressive, interesting, and competitive people heavily involved in doing real things.
My conversations are heavily Whitaker influenced which makes for impressive conversations. Armed with Whitaker, you cut through the bullshit quick.
By the way, it has been a while but I was actually able to have a chat with a former CEO of America's largest oil refinery and I picked his brain on the oil business. Invaluable information.
Here are facts he related to me (you will never get them from the mainstream): Because of the huge advances in geological imaging, the risk of the development of new properties has declined significantly. Economically extractable oil is running 1% ahead of the increases in demand, one of the greatest rates in history (demand is increasing 2% annually, new discoveries 3% annually).
Because of financial innovation, there is far more participation by the speculators in the futures markets. The difference between cash prices and futures prices has for last several years been unprecedented. This has been a bonanza for the oil giants. They have been more than happy to sell to the speculators on the most advantageous terms they have ever had.
The distributors have been buying any container, any ship, any form of warehousing they possibly can because of the high spread between oil cash and oil futures.
Our high gas prices are due to speculators (hedge funds and bank trading desks), not oil shortages. Oil is in great abundance and will be, absent general war, for the foreseeable future.
The refinery industry and oil giants love it. They get to book record profits at the expense of dumb speculators and blame it all on "peak oil". Like any other commodity, oil is usually in oversupply. The commercials (oil giants) know their bonanza can't last. It never does.