A recent Center for Strategic & International Studies conference in Washington, DC, on energy geopolitics saw few problems with oil supply and demand.
But it was the unforeseen problems that worried speakers.
A CSIS draft study said the benign global energy situation prevailing since the late 1980s masks two dangers: It obscures future geopolitical shifts that could affect global energy security and has made policymakers and the public complacent about foreign policies that affect long-term global energy supplies.
The study said the US and other Western governments should give priority to diplomatic relations and trade policies with energy-producing nations.
It said that, although the US is urging a Caspian oil export pipeline that bypasses Russia and Iran, it should not obstruct the development of other routes.
And it said Western nations should work to encourage key energy-producing countries to make market reforms that will improve energy production and encourage foreign investment.
Consumers
Sam Nunn, a former US senator, said, "We need to better coordinate our foreign policy decisions and our long-term energy policy needs."
James Schlesinger, a former US energy secretary, agreed: "Most of our oil policy reflects domestic policies and not international concerns."
Robert Priddle, the International Energy Agency's executive director, noted a shift in relations with oil producing nations.
He said IEA nations didn't rejoice during the 1988 oil price collapse and became increasingly concerned about how revenue cuts would affect Middle East producers.
He said, this year, with the price position reversed, Saudi Arabia has said the world oil market should be stabilized to protect the interests of both consumers and producers.
Priddle said, "Producers don't want to gouge consumers, and consumers don't like to see the producers suffering. That sounds like the sort of basis on which long-term relationships are built in open markets."
Producers
Ali Al-Naimi, Saudi Arabia's oil minister, noted a dramatic drop in the energy needed to produce economic growth.
"The share of oil in the industrialized countries' energy consumption declined from 55% in 1980 to 40% today, and oil's share in world merchandise trade declined from 17% to 7% in the same period."
He said industrialized countries need 50% less oil than 20 years ago for the equivalent unit of GDP.
Al-Naimi sees no future oil shortages. He said, in 1970, global production was under 50 million b/d, and now it is 75 million b/d. In 1970, the reserves-to-production ratio was 33 years, and now it is more than 46 years.
Peter Bijur, Texaco Inc. chairman and CEO, predicted, "The 21st Century will continue the age of abundant hydrocarbons."
He explained that the fall of communism and the liberalization of economies in Asia and Latin America have opened vast energy resources previously inaccessible or underdeveloped.
And he said improving technology will make more reserves available. "Where 40% was considered impressive just 2 decades ago, we can now extract 70% or more of a field's reserves," said Bijur.
