Experts paint troubled picture for future of world oil supply

By Nicholas K. Geranios
The Associated Press
SPOKANE — It may already be too late for the United States to avoid massive economic disruption because of a decline in worldwide oil production, an industry expert said yesterday.

Roger Bezdek, a consultant for the U.S. Department of Energy, told the Global Oil Depletion conference that it will take more than a decade to find alternative sources of energy if oil production reaches a peak, which may be imminent.

"No one knows when oil will peak," Bezdek said. "But if we wait until the peak, we will be in deep economic troubles for decades."

The conference was presented by the Thomas S. Foley Institute at Washington State University and painted a gloomy picture of a future in which there is increased competition for diminishing resources.

Bezdek said it will take the nation 10 to 15 years to deal with a decline in oil supply by finding alternative means to move people and goods. That time is needed to find substitute fuels and get higher fuel efficiency.

"It may be too late to avoid economic dislocations," he said.

Matthew Simmons, an investment banker who recently wrote "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," said the United States has been in denial about energy issues for decades. The nation has built its economy and lifestyle around an endless supply of cheap oil and now finds itself with stiff competition for oil from India and China, he said.

The recent hurricanes on the Gulf Coast have knocked a big hole in oil and natural-gas supplies, and it is unclear when those refineries will be back in production, Simmons said.

Herman Franssen, president of International Energy Associates of Chevy Chase, Md., said that two-thirds of the world's oil comes from the Middle East, which probably cannot increase its production very much.

He predicted that the situation in Iraq will remain unstable for years, and that oil production will not rebound to the levels of the Saddam Hussein-era for years.

He predicted that India and China within 20 years will need as much oil as the industrialized world now consumes and that prices will skyrocket.

Simmons said the U.S. should switch to moving more goods by railroad and ship, rather than trucks, to cut oil consumption. More workers should work from home to cut down on commuting, he said.

The nation should also grow more of its own food to cut down on imports, he said.

Simmons predicted there will be natural-gas shortages this winter because of the damage from hurricanes Katrina and Rita.

In the news today oil prices have reached two month lows. Even the market is clearly in the dark about what is really happening.