Chapter 3

(Lunch Scene)

“Any wine for you?” Victor asked.

“No,” said Cassie. “I want to be awake for lunch.” She turned her attention to the waiter. “I’ll just have some iced tea.” The waiter nodded and retreated toward the kitchen.

“Have you eaten here before?” Victor inquired as he picked up the menu.

“Just had some drinks after work one time.”

“I hope you didn’t fall asleep.”

“I hadn’t been riding then. Just sitting all day.”

“How about I order us a couple of appetizers to share?” Victor asked.

“That would be fine.”

Victor said he would get the stuffed grape leaves and the goat cheese torte, which he called “magnificent.” The waiter came with their drinks, and Victor ordered the appetizers, indicating that the two of them would order entrées later.

“Tell me about yourself,” Victor said.

“What do you want to know?” Cassie asked.

“You said you work near here.”

“Yes, on 19th Street, just off the circle.”

“And what do you do on 19th Street just off the circle?” Victor had a slight smile on his face as if to acknowledge that Cassie was forcing him to ask for each bit of information.

“I work for Energy Advisers International as an oil and gas analyst.”

“You work for them?”

“You make it sound bad.”

“No, no. You must be a real big shot to work there.”

“I’m not really a big shot.”

“Oh, don’t be so humble.”

“The truth is I got the job because a longtime friend of my father’s recruited me.”

“He must think you are good.”

“I suppose so.” Cassie paused for a moment as the waiter lowered the appetizer plates onto the dark red tablecloth. “Oh, that torte looks good.” Cassie served herself a piece, as did Victor. She took a bite. He was definitely right about the torte. She noticed that Victor was looking intently at her as she chewed.

“I’ll let you have the rest of it just to see that look on your face,” he said.

“You’re sounding almost lewd,” Cassie retorted.

“I enjoy other people’s enjoyment. It makes my life twice as enjoyable.” Victor finally took a bite of the torte.

“Now, getting back to our conversation,” Cassie continued. “How do you know about EAI? That’s the kind of thing usually only industry insiders know.”

“Well, I suppose you could call me an industry insider,” Victor responded. “I used to trade oil futures in New York.”

“No kidding.” Cassie sat up in her seat.

“Yes, I worked for one of the big commodity houses, first as a computer guy and then as a floor trader. After that, I managed commodity funds for them; and finally, I started my own hedge fund.”

“And that’s what you are doing now?”

“Oh, no,” Victor said shaking his head. “I disbanded the fund two years ago.”

“So, now you’re making a living as a musician?”

He laughed. “That would be very nice. But it’s really just a hobby.”

“So you’re—”

“I’m hanging out in Washington with some musician friends because I’m a good pianist; and yes, with what I made on the hedge fund, it doesn’t matter whether I make a living as a musician.”

“Oh, I see.”

“Does life seem a bit unfair now? Even from where you work at the fancy consulting firm?”

“I didn’t mean that.”

“It’s all right.”

They both concentrated on finishing the appetizers for a couple of minutes. Cassie looked beyond the half wall of red brick that defined the edge of the patio and could see that the sun had finally broken through the clouds. A delicious, light breeze was blowing on them. The city’s usual summer mugginess was taking a break.

The waiter approached and asked for their orders. Victor got the lamb shank and Cassie ordered the tuna kabob. She also asked the waiter to set aside a piece of raspberry cheesecake so she could make sure she got one.

“Perhaps we should go straight to dessert,” Victor said after the waiter had gone.

“Well, I have been known to do just that,” Cassie replied.

“All right, so, what can you tell me about oil?” Victor asked.

“You mean that you don’t already know,” Cassie retorted.

“Are you doing some kind of report now maybe?”

“I just got back from the oil sands in Canada.”

“Are they going to save the world?”

They think they are.”

“What do you think?”

“I think they’re going to wreck northern Alberta trying to.”

“And will they succeed at saving the world?”

“Do you think the world needs saving, Victor?”

“It most certainly does. But the world doesn’t even know it.”

“You said the other night that what you saw in Russia is coming here. What did you mean by that?”

“Collapse…financial collapse, peak oil collapse, climate collapse, take your pick.”

Cassie focused in on the words “peak oil.” The concept was really the product of some fringe petroleum geologists who theorized that the world was coming to the point where it wouldn’t be able to grow petroleum supplies anymore. Some of them predicted that production would decline rapidly after the peak and that that would cause a financial and social collapse. Surely someone as intelligent as Victor, an oil trader no less, wouldn’t fall for this apocalyptic claptrap.

“So you think oil is peaking?” Cassie asked.

“Yes, very soon. Maybe even this year,” Victor responded. “That’s why I closed down my fund. Our focus was oil, and I don’t think there’s going to be much oil trading in the future. Oil will be too precious. Everything will be locked up with contracts. No freely trading oil, and so, nothing for a trader like me to do.”

“I can’t believe someone of your intelligence would buy into such a crackpot idea.”

“So, what do you think?”

“Well, our firm forecasts that we have at least three decades, maybe more, before oil production hits a plateau. And we believe that plateau will go on for several more decades,” she explained. “That’s plenty of time to develop new energy sources.”

“I already know what your firm believes. I want to know what you believe.”

“I think they’re right.”

Victor snorted mildly as he smiled, shook his head and looked down.

“What?” Cassie said.

“Let’s take your tar sands,” Victor began. “You don’t go looking for oil in gunky tar sands unless all the easy-to-get stuff is gone. And yet, this is what is going to fill the gap 20, 30, 40 years from now according to you?”

“Yes, I guess you could say that.”

“And how many millions of barrels a day are these tar sands supposed to give us?”

“We project five million by 2030.”

“And that’s out of how many the world will be using by then, that is, according to your calculations?”

“Out of approximately 113 million.”

“Even if they do it—which I doubt, because they’ll run out of water or natural gas to process it—it’s a drop in the bucket. Oil from tar sands is so hard to get that you can’t produce it very fast.”

Victor was starting to infuriate her. He wasn’t looking at the whole picture. Sure, he was an oil trader. But oil traders look at the very short term for the most part. That’s not the same as studying the long-term trends which she had done for years.

“But Victor, you’re just looking at a small piece of the puzzle. What about all the deepwater deposits? We’ve only just begun to explore those all over the world. That’s where the big growth is going to come from.”

“All right, okay,” he said. “Take this Mooney-3 discovery well. It’s supposed to be the first of many that will bring us 15 billion barrels of oil from the middle of the Gulf of Mexico. Well, you don’t go 200 miles out into the gulf unless you’ve basically found all the easy stuff on land and close to shore.”

Victor was getting agitated now. He had been calm up to that point. But Cassie had obviously hit on something that pushed a button. “And even if there are 15 billion barrels there, that’s only a six-month supply for the world,” he continued. “And they never mention the low estimate of three billion barrels; it’s too depressing. Now, I predict the oil they found in the Mooney-3 well will turn out to be too costly to produce, and they’ll end up capping it.” He emphasized this last point with a wave of his finger.

“But Victor,” Cassie said, “you’re underestimating advances in technology. You’re acting as if we’re still in the Stone Age. And if people like you were in charge, we still would be.” Cassie didn’t mean for the last sentence to come out. But she was getting agitated, too. She couldn’t abide sloppy thinking like Victor’s.

“Technology is like fairy dust to you,” he retorted. “You sprinkle some on the tar sands and magically their output goes up four times.” Victor was wiggling his fingers like a magician, first to one side, then to the other. “You sprinkle some on the ocean and magically oil that is 30,000 feet down becomes easy to produce.” Victor leaned forward. “Yes, Cassie, we have technology. But now geology is winning the contest between the two. Remember: geology is destiny. You can’t get away from it no matter how much fairy dust you spread around.”

“Victor, maybe we should talk about something else.”

He raised both hands as if to surrender. “Okay, okay. That’s fine.”


Copyrighted Material

Copyright © 2010 by Kurt Cobb