by Matthew R. Simmons
Chairman and CEO
Simmons & Company International

As oil prices rise, the debate about “peak oil” rages on. Optimists, who are still probably the majority of oil pundits, argue that there will be no oil peak, at least not for decades. They base this belief on various widely held convictions, including the magnitude of the world’s energy resource endowment, the ability of technology to recover greater amounts of oil once left behind, the lag time between high oil prices and the ramped-up drilling they stimulate, the remarkable amount of unconventional oil that has become commercially viable because of high prices, and unspecified “technology advancements.”

These cheerful optimists also dismiss the fact that current oil prices have anything to do with tightening market fundamentals. Instead, they argue that today’s crude prices are merely a by-product of a weak dollar, hedge fund speculation, geopolitical fears, downstream bottlenecks, the Iraq war, Nigerian political unrest and the thirst for high prices within the Organization of the Petroleum Exporting Countries (OPEC), which keeps massive spare capacity shut in.

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