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(ICIS) -- Investment in oil supply is not
keeping pace with the global demand growth of around 1m bbl/day, setting up a
shortfall that puts the energy balance in peril, said the head of independent US
oil company Hess on Tuesday. "An energy crisis is coming, likely to be triggered
by oil," said John Hess, who serves as the company's CEO and chairman.
"Supply will then have to ration demand and prices will skyrocket - with
the likely outcome of bringing the world economy to its knees," Hess told the
Cambridge Energy Research Associates (CERA) conference in Houston. "The $140/bbl
oil price of three years ago was not an aberration, it was a warning," Hess
contended.
The problem is not one of a lack of oil resources, but a lack of new
investment in accessing those deposits, Hess said. The US in particular needs to
maintain existing tax incentives for drilling, and also encourage more upstream
activity in the Gulf of Mexico.
On the demand front, oil represents 37% of US energy demand, of which 71%
is used for transportation, he noted. The US should hike the vehicle performance
standard to 50 miles/gal, much higher than the 35 miles/gal target set for 2016,
Hess said.
That greater efficiency could be achieved through a mix of engine
downsizing, using more diesel engines, reducing vehicle mass and pursuing
advanced technologies such as hybrid cars.
It would take 15 years to replace the US fleet of 230m cars and
light-duty trucks with more economical vehicles, but the change could save 3m
bbl/day of oil, for an annual savings of more than $100bn (?72bn) at current oil
prices, Hess said.
mrcplast.com
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