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Commentary By Robert Bryce

Death of A Gentleman: Matthew Simmons Dead at 67

Over the past few years, whether the discussion was peak oil or peak natural gas, Matthew Simmons was almost always involved. No longer. Simmons, 67, died suddenly Sunday in Maine. A local paper, the Kennebec Journal, is reporting that Simmons died last night of an apparent heart attack while in a hot tub at his home.

Simmons became wealthy as an investment banker. In 1974, he founded the Houston-based investment banking firm Simmons & Co. and became one of the industry’s most-respected analysts. But over the past few years, Simmons became increasingly controversial as some of his views on the oil and gas markets became untethered from reality. His outspoken positions on the BP oil blowout and on the potential of shale gas led to the severing of his relationship with Simmons & Co. in June. Simmons, who was chairman emeritus of the firm, left after making comments about the pending bankruptcy of BP. As the Houston Chronicle’s Tom Fowler reported in June “Simmons’ views have become increasingly at odds with those of the firm’s analysts in recent months, prompting the bank’s CEO Michael Frazier to issue a statement to employees and some customers.”

Fowler went on, saying that Frazier had also noted Simmons’ skepticism about unconventional gas, saying that Simmons statements were “in direct contradiction to the conclusions Simmons & Company International has reached from the in-depth and lengthy research we have conducted on the subject. Our view is that were it not for unconventional gas, the North American natural gas resource base, which is presently witnessing compelling productivity, may otherwise have entered into a period of sustained decline."

Earlier this month, we re-published a piece written by Robert Rapier, titled “Is Matt Simmons Credible?” in which Rapier wrote that Simmons has made “irresponsible and sensational claims that don’t hold up to scrutiny.” Indeed, over the past few years, Simmons made numerous claims that were quickly proven wrong. For instance, in 2003, he predicted that natural gas supplies were about to fall off a “cliff.” When asked what to do about the pending shortfall, Simmons said “the solution is to pray....Pray for no hurricanes and to stop [sic] the erosion of natural gas supplies. Under the best of circumstances, if all prayers are answered there will be no crisis for maybe two years. After that it’s a certainty.” The reality: thanks to the shale gas revolution, US dry natural gas production in 2009 was nearly 21 trillion cubic feet, a level last seen in 1970.

While Simmons certainly made some mistakes, he also made some critically important contributions, and the most significant of those is likely his 2005 book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. In a review of the book, I wrote:

“It doesn’t matter if Matthew Simmons is right about Saudi Arabia’s future oil production capability or not. Even if he is wrong, he’s right.Here’s what I mean: Simmons has used his ample personal fortune and his stature in the industry to singlehandedly force the House of Saud to open its kimono. His relentless focus on the Saudis’ ability — or possible inability -- to continue increasing the output of their vast oilfields has required the Saudis to mount an expensive public relations campaign. They’ve been forced to answer questions in public forums and be far more open than ever before about what are arguably the world’s most important oil reservoirs. Simmons may be the only person in the energy business who had the access, reputation, platform, and most importantly, the desire, to force the Saudis to have this discussion.”

In addition, Simmons was unafraid to take an unpopular stance, namely, that the OPEC member countries had a right to get a good price for their oil.

In speech after speech, Simmons would point out that by 2030, the population of the OPEC member countries could exceed one billion people. And furthermore, that over the past two decades, nearly all of the OPEC members have seen a sharp decline in their per-capita income levels. If their populations rise, Simmons said, the OPEC world will have huge numbers of new, poor, uneducated citizens with no prospects, a situation that that is a tried and true recipe for breeding religious extremism. One of the solutions to the problem, Simmons said, was higher energy prices so that the OPEC countries can develop their social infrastructure. Simmons put the issue bluntly during a February 2005 speech that I attended. Is it right, he asked, “for OPEC to supply so much value and yet be so poor?”

Matt Simmons was always incredibly kind toward me. I first interviewed him in early 2001 about the potential for energy shortages in California. In 2008, he wrote a highly favorable blurb for my third book, Gusher of Lies. I last interviewed him in April 2009, at his office in Houston. He was excited about the possibilities offered by energy harvested from the ocean and about his new venture, the Ocean Energy Institute. When the interview was over and I stood to leave, he wished me luck, and asked me to keep in touch.

Matt Simmons was hard working. He loved to talk about energy issues and weigh in on big subjects. He was passionate about his work. But more than all of that, he was a real gentleman. I will miss him.

This piece originally appeared in Energy Tribune

This piece originally appeared in Energy Tribune