ABU DHABI, United Arab Emirates (AP) — Oil executives and political leaders told a major petroleum conference Monday that the era of cheap energy is over, and warned of another price spike if investment in oil production is curtailed. "Prices are falling, but they're falling for the wrong reasons: because of reduced demand and a consequence of reduced economic activity, not because we have increased supply or increased energy efficiency," BP PLC Chief Executive Tony Hayward said at the at the Abu Dhabi International Petroleum Exhibition and Conference. Even as demand continues to grow in booming parts of Asia, relatively low energy prices and an eventual rebound by the global economy will accelerate demand for oil again in the West, officials said. "Increased demand will stretch the system to its limits, and this will cause another upward spike in the price," Hayward said. Prices have tumbled by more than half from summer highs above $147 a barrel as consumers and businesses slash spending. Independent analysts expect oil prices to stay well below the $100 mark for some time as the world struggles to sort through the fallout from the financial crisis that continues to roil economies and markets around the world. But they acknowledge that global supplies remain closely linked to demand — and that the balance could quickly tip in the other direction. On Monday, benchmark light, sweet crude for December delivery fell 3 percent to $65.76 a barrel on the New York Mercantile Exchange. Industry experts here did not say what they thought would be a "fair" price for oil, or predict how high or low prices could swing in the coming months or years. And they acknowledged prices may have yet to find a bottom. But trends suggest the world will consume even more oil for decades to come, they said. Ladislas Paszkiewicz, the Middle East president of French oil giant Total S.A., predicted fossil fuels will account for 75 percent of the world's energy supply by 2030, down only slightly from about 80 percent today. Meeting that demand will prove costly. "It is common knowledge that the age of easy oil is gone forever," UAE Energy Minister Mohamed Bin Dhaen Al Hamli said at the start of conference. But the future will also be lucrative for the energy companies that can secure the untapped reserves that remain. Abu Dhabi National Oil Co. and a division of Royal Dutch Shell PLC said Monday they have signed a deal to explore the possibility of developing deep natural gas fields off the emirate's coast. Shell, which already holds a 9.5 percent stake in the Abu Dhabi Onshore Co. and a 15 percent share of Abu Dhabi Gas Industries Ltd., said that once an evaluation is complete, it hopes to "quickly begin joint exploration and development activities." Financial terms were not disclosed. British Prime Minster Gordon Brown, during a brief speech at the conference, urged world leaders to adopt an energy policy that does not pit oil consuming nations against producing countries, and paves the way for lower carbon use in the future. Specifically, he called for more transparency regarding global supply and demand, increased energy efficiency, lower barriers to energy investment, aid for poor countries most hurt by high prices. "The volatility in oil markets is damaging," Brown said. "A new framework for energy based on responsibility and our mutual interdependence is needed." Brown's visit to the Emirates was part of a three-nation Gulf tour aimed in large part at convincing wealthy countries in the region to contribute to the International Monetary Fund's bailout reserves. He has promised leaders in the energy-rich region they would have a greater say in any future new world economic order. The British prime minister is organizing a meeting of energy ministers in London on Dec. 19. Ed Miliband, Britain's newly appointed secretary of state for energy and climate change, told The Associated Press that ministers would try to address market transparency and volatility, and how the energy market is responding to the weakening global economy.

Source