I attended the Berkshire meeting on Saturday with my 29 year old son. Here's what Buffett and Charlie Munger said about oil...
Becky (4:49:26) "This question comes from ______ _______ in Tulsa. Oklahoma: “ He said he recently listened to the Berkshire Hathaway 2008 Annual Meeting where you talked about global oil production. At the time you talked about major ramifications if global oil production went below 85 million barrels a day in 25 years. We are at the 14 year mark and global oil productions looks to be around 79 million barrels a day (BOPD). At the same time we are depleting our strategic oil reserve. Should the US be doing something differently and do you see consequences to these actions in the next 10 years if we do not become more proactive?
Buffett (4:50:02): “Charlie’s the expert on oil…. Compared to me.”
Munger(4:50:30):"…I have a different view on this subject. I like having big reserves of oil. If I were benevolent despot of the US, I would just leave most of the oil we have here (in the ground) and just pay whatever the Arabs charge for their oil…and I’d pay it cheerfully and conserve my own. I think it (oil) is going to be very precious stuff over the next 200 years. Nobody else has my view. It doesn’t bother me. I just think they’re all wrong. (Buffett and audience laughter). But at any rate that is not the normal view."
Buffett (4:51:15):”And we’ve been fairly flexible in our own view actually. The federal government is serving up however many million barrels a day of the stuff into the economy (laughing) and it wasn’t that long ago that …you know…the idea that anybody that produced a barrel of oil was somehow doing something terrible. Just try doing without 11 million BOPD and see what happens tomorrow. It is something that everyone has a feeling on immediately and ….uh …this gets into a whole bunch of different tribes of sorts. And you offend an awful lot of people if you talk in any way about it, but in the end I think…at the moment at least …most people feel it’s nice to have some oil in this country rather than not have it. And we’re using a lot of it and if we were to try and change over in three years or five years …uh…uh… (choosing words carefully) nobody knows what would happen but the odds that it would work well are extremely low I believe.”
At one point (can't find the exact quote) Munger said (paraphrasing) that Petroleum Engineering was a "noble profession".
I love Charlie