November 1, 2005 CNBC's Squawk Box hosted a Deep Oil vs. Peak Oil debate between Craig R. Smith, author of Black Gold Stranglehold: The Myth of Scarity and the Politics of Oil (WND Books) and Matthew R. Simmons, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Wiley) this morning.

Craig Smith contended that oil is NOT a product of decaying dinosaurs and prehistoric forests, but that oil is constantly being produced by the earth, far below the planet's surface, and that it is brought to attainable depths by the centrifugal forces of the earth's rotation.

Matthews Simmons' Twilight in the Desert argued that oil is a finite resource and asserts that Saudi Arabia's oil production may have already peaked leaving the world in a politically and economically unstable situation.

Ultimately, infinite or finite oil reserves have serious economic implications. Smith's 'deep oil' argument provides a perspective as to how America's unbalanced pattern of consumption and lack of production puts consumers in a virtual stranglehold by foreign governments, corrupt political leaders, terrorist organizations, and oil conglomerates. Likewise, Simmons' 'peak oil' claim puts consumers in a critical position if Saudi Arabia, one of the world's low-cost oil producers, experiences diminished reserves forcing the U.S. to buy oil from other countries at higher prices. With high prices at the gas-pump and record-setting heating-fuel costs, Smith and Simmons debate is a positive step in advancing the argument that more needs to be done to address refining and exploration problems facing the U.S.

WATCH: CNBC "Peak" oil vs. "Deep" Oil Debate

Listen links to the debate on CNBC Squawk Box ...

* 11-1-05 -- "Peak vs Deep Oil" debate 1 - CNBC Intro (1:35trt)
* 11-1-05 -- "Peak vs Deep Oil" debate 2 - CNBC - Why $55B to explore? (1:18trt)
* 11-1-05 -- "Peak vs Deep Oil" debate 3 - CNBC - Abiotic Oil in Nutshell (:54 trt)
* 11-1-05 -- "Peak vs Deep Oil" debate 4 - CNBC - Fallacy of Composition (1:45 trt)
* 11-1-05 -- "Peak vs Deep Oil" debate 5 - CNBC - End of world theories wrong (1:23 trt)

Peak Oil vs. Deep Oil
CNBC Squawk Box
November 1, 2005
Guests: Craig Smith and Matthew Simmons
Hosts: Mark Haines and Brian Westbury

Mark Haines: . . . Crude below $60 dollars a barrel for the first time in three months, warm weather zapping the demand for heating oil, but the debate over how much 'black gold' exists continues to rage on. In Houston, Matt Simmons, CEO of Simmons & Co. International, author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. He says the booming oil days are over. In San Diego, Craig Smith, CEO of Swiss America Trading, author of Black Gold Stranglehold says there's plenty of oil, we just have to dig deeper.

All right, let's start with, Craig. The argument that there's plenty of gold but we just have to dig deeper. Are you talking about finding new oil or are you talking about improving the technology to recover out of the fields?

Craig Smith: Well, I think both, Mark. I mean, if you look at the Department of Energy's Energy Information Administration, we currently have 1.28 trillion barrels of proven reserves, which are the highest in our history. And, if, in fact, we are depleting the giant oil wells, how come the reserves are continuing to increase? I think with technology and new finds, especially, off the continental shelves and in the gulf, like the Thunderhorse rigs or the Atlantis project, I just don't buy the theory that we're running out of oil.

Mark Haines: Matt Simmons, what do you say?

Matt Simmons: Uh, we're not running out of oil. The risk of running out of oil is miniscule, but the risk that we're peaking is a very real threat. And until we have better data, we can have a theological debate for the next two or three years. But what we really need to do is, is, is demand field quarterly production statistics and then we can actually start looking at real numbers.

Mark Haines: Will you concede that improvements in technology could delay the peak for quite some time?

Matt Simmons: No. I actually think that the, uh, what we've done with technology has allowed oil to be pulled out of the ground at far faster rates. Its created decline curves that we basically, that weren't literally possible ten or fifteen years ago. It's also allowed the industry to do riskier projects. And the riskier projects, sometimes don't work very well. There are two deep-water projects in the Gulf of Mexico, for instance, Frontrunner and Marco Polo, uh, that basically within in months of coming on stream both watered up. Marco Polo is now down to 10 percent of what it was supposed to be at a year ago. So I think a lot of the technology actually made things harder to do, not easier.

Craig Smith: But I think at the same token you have to look at projects like Atlantis that are going to be online producing 150,000 barrels a day. And also Thunderhorse, which is a billion-barrel rig. I mean, I ask the simple question, Matt, of why would the oil companies be committing 55 billion dollars to harvesting the gulf if, in fact, there's not enough oil there? I mean, it just wouldn't make sense mathematically.

Matt Simmons: Well, the industry is struggling right now to try to maintain, at best, flat production. And so I think, if there's a project that can be done they're gonna tackle it. The problem is we just don't have the abundant inventory projects to do that we had ten years ago.

Brian Westbury: Mr. Smith, this is Brian Westbury. Uh, good morning.

Craig Smith: Good morning.

Brian Westbury: You have an interesting theory that basically that says oil is not decaying dinosaurs, or at bends of rivers where leaves piled up and decayed. That basically, oil is deep in the crust that it comes out as the earth spins. Doesn't that mean if I just dig deep enough, I'm going to find all the oil I want?

Craig Smith: Well, in theory that's correct. And I think that the Russians have proven this beyond any question. I mean, if you look at the VietSo Petro project between Vietnam and Russia, they drilled right through crystalline basement and have found wells like White Tiger or Black Lion that are producing 280,000 barrels a day. Soon, Black Lion will be producing 200,000 barrels a day. I mean, clearly, we've got a lot of oil out there (BW: 'Yeah!') and I think we need to embrace new technology to go get some of this oil.

Brian Westbury: Well, that's great. Let me come back to you (Matt Simmons) hundreds of years ago Thomas Malthus predicted that the population of the earth would outgrow its, our ability, to grow food. Clearly, technology made him dead wrong. Uh, it was just simply a horrible forecast. Isn't it the case that, that, that's likely to happen here in the energy industry as well?

Matt Simmons: Uh, history will finally prove one way or the other, but I think the higher we actually have demand, the faster we're actually going to hit peak oil. And unfortunately, too many areas now are in irreversible decline. But, ten years ago most experts thought the North Sea wouldn't approach peak oil until 2010, and by 2000 would be producing about 7.5 million barrels a day. The reality is that it peaked in 1999, and it's already off 30-35 percent. That's using every scrap of technology we know about.

Craig Smith: But logicians, you know, for years have talked about the fallacy of composition. You know, just because the Saudi oilfields may be depleting, it doesn't mean the world's supply of oil is diminishing and I think we're starting to prove that over and over again, whether it be in the Niger Delta, or whether it be in the Trinidad Basin, or the Taiwan Basin. I think that America needs to lead the charge in embracing the technology in getting out there and finding these proven reserves that are out there bringing them to market and bringing this price into a reasonable area where we can continue to see the synchronization of global growth that we have experienced for the last twenty years. This, this whole idea of 1972 MIT did a study, Limits Limits to Growth. (BW: Right) And thirty years later, guess what? None of their predictions came true. All of these were running out predictions and the world's coming to an end have never proven out and I don't think this time it's going to prove out again.

Matt Simmons: You know, interestingly enough, I actually finally read 'Limits to Growth' in 2000. And it was amazing. I'd heard so many people talk about this book that (inaudible) we were going to run out of everything. What they were warning about, is running out of things in 2050 to 2070. So I think the jury's still out. (Crosstalk)

Brian Westbury: But, but...

Craig Smith: Well, the initial . . .

Brian Westbury: But, but hold on there for a second, because I actually have an original copy of that book and I've read it and they, they, yes, they didn't say we would run out of anything until 2050, but they said we would have super spikes in prices, and that there would be starving people by the late 1980s and the early 1990s.

Craig Smith: That's correct. And at 30 years, which would be 2003, we would clearly have depleted a majority of the oil and there would be huge implications in the economies throughout the world. The problem is, if you believe that we are getting oil from decaying dinosaurs and debris from the forests then obviously there's only a finite supply. We don't embrace that. We believe that the earth is creating oil as we speak and that with technological advances and the ability to put human resources together with natural resources, and the wonderful capital markets we have here in America, we can get all the oil we need for dozens, if not hundreds of years to come.

Mark Haines: Alright, we have to leave it there, but we thank you both very much.

Matt Simmons: Thank You.

Craig Smith: Good being with you, Mark.

Mark Haines: Appreciate your sharing your thoughts with us. Matt Simmons, CEO of Simmons Intl., Craig Smith, CEO of Swiss America Trading.

Oct 25, 2005

WND BOOKS -- Craig Smith, co-author of the forthcoming book Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil (WND Books, Nov. 7, 2005) says that "oil guru" Matt Simmons's claim that crude oil could hit $190 this winter is absolutely false.

"Last year, we predicted that we would see $3.00 per gallon gasoline and we did," states Smith, CEO of Swiss America Trading Corporation. "Light crude for November fell $2.21 to $60.20 per barrel. To say that we will see $190 per barrel is a scare tactic that ties in with the message that we are running out of oil, which we are not."

"Simply stated, we believe those who say we are running out of oil are wrong. We have plenty, maybe even an exhaustible amount available deep within the earth. We are sitting on more proven petroleum reserves than ever before, despite the increasing rate at which we are consuming petroleum products. New and gigantic oilfields are being discovered at an increasing rate, in places the fossil fuel theory would never have been predicted possible.

"If we are running out of oil, why are worldwide oil reserves today at historically high levels? Since 1980, proven oil reserves have gone from 645 billion barrels to 1.28 trillion barrels."

The problem, Smith says, is not oil scarcity, but rather, a refining crisis. "Today, the U.S. oil industry is sitting on a quantity of oil reserves that has never been higher. Still, we have built no new refineries, and the refineries in operation are producing at or near capacity."

Black Gold Stranglehold debunks the myth that the world is running out of oil through clear and compelling research based on the abiotic theory of oil. The abiotic theory asserts that oil is not a product of decaying dinosaurs and prehistoric forests. The scientific evidence cited in Black Gold Stranglehold suggests that oil is constantly being produced by the earth, far below the earth's surface, and that it is brought to attainable depths by the centrifugal forces of the earth's rotation.

As a result, Black Gold Stranglehold argues that the extremely unbalanced pattern of consumption and production makes it possible for foreign governments, corrupt political leaders, terrorist organizations, and oil conglomerates to place the citizens and economy of the United States in a stranglehold of supply and demand.

Related Stories
The running-out-of-oil myth -WND The 1970s scientific study known as Hubbert's Peak, predicting we would exhaust oil reserves by 2003, has been proven false.
We are currently sitting on more proven petroleum reserves than ever before despite the increasing rate at which we are consuming petroleum products. New and gigantic oil fields are being discovered in places the fossil fuel theory would never have been predicted as possible.

"Peak oil" debate is heating up -USA Today ... "Soaring pump prices could become permanent way of life", say some. It appears the release of Mr. Smith's new book is not a moment too soon! Find out the truth for yourself by reading it. Hardback copies should arrive in a better bookstore near you this week. (Read it and rejoice!)

NEW BOOK RELEASED! -- Black Gold Stranglehold: The Myth of Scarcity and the Politics of Oil, by Jerome Corsi and Craig Smith exposes the fraudulent science that has made America so vulnerable: the belief that oil is a fossil fuel and that it is a finite resource.

LISTEN to Mr. Smith on (recorded 10-18-05):
Black Gold Stranglehold -Intro-Roadmap to US Energy Independence-5:02trt
Black Gold Stranglehold -2-Earth creating oil as we speak-3:46trt
Black Gold Stranglehold -3-Oil for Euro/Gold vs. Dollar-2:51trt

Craig R. Smith is an author, commentator and popular media guest because he instantly engages audiences with his common-sense analysis of local, national or global trends. Mr. Smith has authored two books: Black Gold Stanglehold: The Myth of Scarcity and the Politics of Oil (Oct. 2005) and Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush (Aug 2001)
DISCLAIMER: All of the provided information is believed to be accurate, however errors are possible. The opinions in the Commentary section do not necessarily reflect the opinions of Swiss America. Past performance of any investment is no guarantee of future performance. All investments have risk.

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