The Garden of Betrayal - Lee Vance [34]
I’d half warmed to Simpson, and hoped he’d point out that both the Apollo program and the Manhattan Project had been resounding successes.
“Never,” Simpson said vehemently, disappointing me. “I’ve already told you my view of government-sponsored initiatives. The markets will cope just fine if oil and gas prices increase smoothly through time. But only if the markets are given a chance to work freely. And therein lies the critical rub—of the top fifteen energy-exporting countries in the world, exactly two treat hydrocarbons as a free-market good. The other thirteen—a group that includes Iran, Venezuela, Angola, and Nigeria—have all demonstrated their willingness to use their energy resources as a political weapon. So I ask you gentlemen: What happens when one or more of these countries attacks our economy by not selling us their energy? Or, more important, how should we position ourselves in anticipation?”
Three or four people tried to answer simultaneously, their replies uniformly skeptical in tone. Walter rapped his glass with the butter knife again, hard, and everyone fell silent.
“A little more decorum, please, gentlemen,” he commanded sharply. “I’d like to hear from Mark first.” He turned to face me. “How about it? Do you buy the senator’s scenario?”
“Personally,” I said, leaning forward, “as an American and a father, my biggest economic fear for the next generation is runaway inflation on the back of unsustainable deficits and bankrupt entitlement programs.” My remark drew murmurs of approval. Inflation is to financiers as garlic is to vampires, and books about the Weimar Republic had become de rigueur reading in the hedge-fund community. “Still, the senator raises an interesting point. We’re not really vulnerable in the sense he suggests until global demand for oil and gas has met or outstripped supply, but it’s only a matter of time until that happens.…”
“Bullshit,” someone said, repeating the coughing trick. It was an audience that turned on a dime and never cut anyone any slack, but I had too much experience with them to be intimidated by heckling.
“Bullshit yourself,” I shot back. “There’s only so much oil and gas in the world. It’s going to happen.”
“When?” Narimanov asked. There was a rustling around the table as people turned to look at him again.
“Hard to say,” I replied carefully, wondering why he’d asked the question. His company did business in dozens of different energy markets around the globe. If anything, he could probably answer the question better than I could. “Short-term, demand fluctuates with the economy, giving us the boom-and-bust cycles that make cities like Houston go broke every ten to fifteen years. Longer-term, though, demand tends to increase at something slightly greater than the population rate, which is pretty much reflective of ongoing development in the Third World. The great unknown is supply.”
“Worst case,” Walter prompted.
“Worst case …” I began. I fell silent mid-sentence, struck dumb by a sudden appreciation of an enormously unlikely coincidence. The real answer to the question lay in the supposedly unknowable Saudi data that Theresa claimed to have given me that very morning. My brain raced as I struggled to understand what the coincidence might mean. Something fishy was going on, and I didn’t like it at all. Alex rapped me on the leg beneath the table as Walter frowned.
“Worst case is that we’ve already passed global peak oil production,” I managed, regurgitating an analysis I’d expounded a hundred times before. “The Saudis claim to be able to produce another three to four million barrels a day, which represents most of the excess capacity in the world. But no one really knows, because they won’t share their production data.” I ran a hand through my hair, trying to stay focused. “There’s a school of thought that holds the Saudis are lying—to us, and maybe to themselves—and that global oil production is set to turn sharply lower in the near future. Anyone interested in the technical