The rapid growth in energy demand from Asia coupled with difficulties in accessing oil reserves has also resulted in a new energy equation where the days of cheap oil and gas are numbered, Dave O’Reilly, chief executive of ChevronTexaco, told a Cambridge Energy Research Associates conference.
Asian giants like China and India figure prominently in this new energy equation — a development that should not go unnoticed by the U.S. government, O’Reilly said, without specifying what exactly Uncle Sam should do about it.
“What I see happening is the beginning of alliances forming between Asian entities and Middle East entities for the long term,” O’Reilly told reporters. “And I think it’s very important that our government recognizes and understands the implications of that.”
The remarks come as the emergence of fast-growing nations like India and China on the global energy scene sparks fears that they may outbid Western oil majors in asset deals or in securing access to a shrinking pool of oil reserves.
“We are seeing the beginnings of a bidding war for Mideast supplies between East and West,” O’Reilly said. “The new Asian demand is reshaping the marketplace — and we’re seeing the center of gravity of petroleum markets shift to Asia, and in particular to China and India.”
The Asian impact on demand coupled with the lack of easy access to areas of plentiful oil reserves has also meant that oil prices aren’t coming down anytime soon, he said.
Oil prices shot up dramatically in the past year thanks to fears of a supply disruption and the spike in demand, prompting a growing crowd within the energy industry to ponder whether sky-high oil prices are here to stay.
“The time when we could count on cheap oil and even cheaper natural gas is clearly ending,” O’Reilly told the conference.
Not everyone shares ChevronTexaco’s perspective on oil prices.
Exxon Mobil Corp. , the world’s largest publicly traded company, for example, maintains that there has been no fundamental shift in the energy paradigm and that the oil business is simply one that is characterized by cycles.