Thank you very much. I look forward to the opportunity of presenting our views to the committee. We have a presentation that I think each of you has, and I will briefly go to that.
We have two views on this topic. One is that we think that fundamentally the price of oil is going up because of the Hubbert peak oil thesis, which I will discuss. Two, we certainly have a view about who is involved in the commodity markets, because my job every day is to be a student of those markets. We are involved to some extent in some of the markets, and I'd be happy to speak to that.
There is a reason I want to talk about Hubbert's theory. In 1956, M. King Hubbert predicted that in 1970 peak oil production would occur in the United States in the lower 48 states. In 1970, peak oil occurred in the United States and has gone down ever since. Those same theorists who I follow—I'm not a geologist or chemist or have any intimate knowledge with the oil and gas business other than being an investor in it—have predicted that we will hit peak oil in this decade. In fact, in the data points that we have, if you go to the third page, you can see that conventional crude oil production--not non-conventional such as tar sands, methanol, and biofuels, but conventional production--has peaked out in 2005.
On page 4, we've shown the level of discoveries by decade. It's very easy to see that we do not find much oil these days. In fact, I think the commonly accepted number is that for every six barrels we consume, we find one today. So anybody who has any level of math knows we're going to run out. There's absolutely no doubt about it.
We've also put in another chart, on page 5, that basically shows that if you take the known reserves of oil in the ground and their grades, most of them are heavier grades now. We've been producing light grades, which produce more transportation fuels. Now we have in the reserves a higher grade. To produce the same fuels as we have today, we have to go from 85 million barrels a day to 100.5 million barrels to get the same light fuels.
So the message I'm trying to deliver here is that the world is in a real state of declining production in conventional oil. Frankly, I'm not surprised for one second that the price of oil goes up constantly. I'll also talk about speculators in the market.
We've given some examples. The example of Canadian conventional oil is on page 6. Most people would be surprised to look at that number and see that it has been going down since 1971. That's conventional crude oil production. We've had a little blip up here recently, undoubtedly with Newfoundland coming into play.
If you look at the next few slides, we show North Sea oil production, Norwegian oil production, and the Cantarell field in Mexico, which is a famous example. In 2004 it produced 2.4 million barrels. As of the month of July, it was at 971,000 barrels. It has lost a million and a half barrels in four years. Perhaps you might have a sense of how difficult it is to create 1.4 million barrels when I put to you that to produce 100,000 barrels in the tar sands it takes 10 years and $10 billion. This field has gone down 1.4 million barrels in four years. We also show a few other fields there, and 60 of the 98 producing countries in the world have peaked.
So I am of the belief that we are going to have an oil shortage. That oil shortage causes all commodities in the energy area to rise, as we've seen uranium skyrocket, coal has recently skyrocketed, and natural gas has gone to 15%.
Is there speculation in the energy markets? Absolutely. We have our own “made in Canada” examples of it. Amaranth lost a large amount of money, being in long gas contracts, and essentially had to wind up their fund. We had an example of a major Canadian bank announcing that they had lost $680 million in natural gas derivatives. If you lose $680 million, how much did you have invested? You're a chartered bank. Are you speculating, or is this some logical thing?
I'm a student of the gold market. I see major banks get involved in the gold markets ad nauseam, negatively or positively affecting the price. I think the speculators are very much involved in the commodity markets. We have a nickname. We call it the New York Comedy Market—it's a bit of a joke sometimes to see the volatility in those markets.
That concludes my preliminary comments. Thank you.