Panning for black gold, a global challenge
DATE:2008-2-22  FROM:  AUTHOR:  DOWN:2745
HOUSTON ( -- The oil is out there. The hard part is getting it to consumers.

Oil industry executives and experts are gathering here this week for the Cambridge Energy Research Associates' annual conference, one of the sector's most impressive showings of energy industry clout outside of an OPEC meeting.

The backdrop: Tight supplies and rising demand for crude. As a result, executives said, the industry faces serious challenges getting oil to market.

The consensus among participants at the conference is that the world has enough oil to meet growing demand, but that the industry must focus more attention on harvesting the oil.

"An oil crisis is coming, and sooner than most people think," said John Hess, chief executive of Hess Corp (HES, Fortune 500)., the integrated oil and gas company with 2006 sales of $29 billion. "All oil producers are not investing enough today."

Rising income of consumers has propped up demand even as crude prices have spiked five fold in the past six years. Hess offered some perspective: On a unit-to-unit basis, oil is still about 10 times cheaper than a Starbucks latte.

Runaway growth in oil use in India and China - the two countries are expected to boast a combined 1.2 billion vehicles by 2050, up from 20 million a few years ago - is expected to push demand above supply sometime between 2015 and 2020, Hess said.

"It's not a matter of endowment, it's a matter of investment," he said.

A small but growing number of analysts disagree with Hess' assertion that there is enough oil in the ground. They say production of oil has peaked or will peak soon, followed by a slow but steady period of decline that could cause major social unrest.

Oil executives, while acknowledging that crude deposits are ultimately limited, said that new technologies should keep crude production rising for at least several decades.

"Many perceive the supply challenge as one of scarcity," said Mark Albers, a senior vice president at Exxon Mobil (XOM, Fortune 500). "There is no question oil is a finite resource, but it's far from finished."

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