A conference on oil supply difficulties just held in Edinburgh, Scotland, witnessed a lively a debate about supply and demand in energy markets.

Titled Depletion Scotland, the conference examined some of the realities facing energy producers and consumers today.

Energy expert and American investment banker Matthew Simmons spoke about the need for greater transparency in the data offered by both producer countries and the giant oil companies or “oil majors”.

He scrutinised the conventional notion that extra investment in oil capacity will satisfy future demand.

“Many oil experts assume the world will easily be able to grow its use of oil by as much as 40% over the next three decades while bringing down prices.

“Embedded in this thinking is a concept that higher prices will soon induce vast amounts of new supplies and spur technical advances that recover far greater amounts of original oil in place and make the use of non-conventional oil easier.

Lack of data

Simmons said: “This case is an illusion … the current tightness in global oil markets is likely to be a permanent feature.”

He went on to say that at the core of high energy prices is a lack of current data over how much oil really lies underground; a lack of data that creates uncertainty and volatility in the market place.

Simmons proposed a system of third-party auditing that “would allow serious energy analysts to finally calculate well productivity and decline rates … along with field-by-field reserve data”.

“This system would shed valuable light on how close the world is to ‘peak oil’ and whether this issue is still years away,” he said.

“New reporting standards need to be made mandatory, every [producer] who resists should be branded, a 10-person study team can analyse the top 100 fields within a month. Those resisting data transparency have something to hide.”

When pressed by Aljazeera.net on whether countries such as Saudi Arabia, the subject of his forthcoming book Twilight in the Desert, would really open their fields up to outside audits, Simmons replied: “I think they will be forced to, yes, I think that will happen.”

Despite this outlook the investment banker was also keen to stress that he was “an optimist” on the future of energy.

Renewable energy

Also at the conference, eco-businessmen Jeremy Leggett of Solarcentury and David Spaven of Transform spoke on the needs to implement renewable energy and coordinated transport policies respectively.

David Spaven said “the era of cheap fuel is coming to an end and we now have the unenviable task of unravelling the myriad overdependencies on oil which underpin the transportation of people and freight”.

He went on to say that the world needs to put “in place more energy-efficient modes of transport as well as reconstructing our land-use and development-planning processes to create sustainable patters of living and working which can survive oil depletion”.

Spaven said: “The lifestyle changes implicit in the reduction of demand for transport will require serious political will and wide public acceptance of the need for change.

“We require politicians with vision, a rare commodity these days.”

Economic trauma

For his part, Jeremy Leggett said “the shortfall between current expectation of oil supply and actual availability will be such that neither gas, nor renewables, nor liquids from gas and coal, nor nuclear, nor any combination thereof will be able to plug the gap in time to head off economic trauma.

“If more than a small fraction of the world’s remaining coal is burned … the enhanced greenhouse will destroy economies and ecosystems”

Leggett went on to point out that renewable energy may well end up competing with an increased use of coal to generate electricity if oil becomes more scarce and costly. This he said could exacerbate climate change.

“If more than a small fraction of the world’s remaining coal is burned … the enhanced greenhouse will destroy economies and ecosystems. Oil depletion and global warming will conflate as many (governments) try to turn to coal in extremis,” Leggett said.

He spoke gloomily of his experiences with governments. “For ten years I have watched them … fail to address the problem. Naively I thought the best, but now I am less hopeful.”