Every Friday Fast Money treats viewers to a surprise guest. This week we spoke with energy specialist Matt Simmons who told us oil could go over $300.
As you know already, oil prices made a new record on Friday after the weaker dollar and inflation sent prices above $106 a barrel. We thought you'd like hearing from Simmons, the Chairman of Simmons & Co., because his firm is the only independent investment bank specializing in the entire spectrum of the energy industry. Founded in 1974, the firm has acted as financial advisor in over $123 billion of transactions, including 511 merger and acquisitions worth over $88 billion.
Following is a summary of the main points made by Simmons during his interview with the Fast Money traders.
You’re predicting $378 a barrel!?
“We don't understood the value of oil (domestically), replies Simmons. In England they’re paying the equivalent of $9 a gallon for gasoline. That translates to $378 a barrel and it’s having little impact on England's economy, right now."
"The cost of oil is going up, he adds, it’s getting scarcer. We’re not going to run out but we are peaking.”
What about the Canadian oil sands? Won’t they save us?
“They are vast in quantity," replies Simmons. "But they require an unbelievable amount of energy to create oil. And what you end up with is low quality oil that has to be upgraded and blended with high quality oil to get synthetic crude.”
What’s the Club of Rome and how does it factor into oil production?
“It’s a book that was written in 1970 by some futurists that were really worried that by 2050 we were going to start running out of things,” explains Simmons. “There was nothing in the book about running out of oil. That was just something people made up."
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Trader disclosure: On Mar. 7, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (INTC), (YHOO); Pete Najarian Owns (AAPL), (C), (CSCO), (MS), (MSFT), (XLF), (MCD), (BKC); Pete Najarian Owns (COP) Calls, (AMAT) Calls; Pete Najarian Owns (XLB) Puts, (USB) Puts; Pete Najarian Owns (YHOO) And (YHOO) Calls; Finerman Owns (GS); Finerman's Firm And Finerman Own (FLS), (HD); Finerman's Firm Owns (AAPL), (DVA), (FNM), (MSFT), (TSO), (WMT), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (COF), (RTH); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owned (DVA) On 12/17/07, 2/12/08, 2/26/08