CARACAS - The high oil prices seen since the US-led invasion of Iraq could be followed by a drop, as has occurred for decades after every rise in prices. But even then, signs pointing to shortages in the medium to long term indicate that the era of cheap oil is officially over.
Indeed, within a generation there might not be enough "conventional" oil available to satisfy the insatiable demand in a world that consumes more fossil fuel each year.
"The mechanism by which global oil prices are set is intact, but the normal behavior of supply and demand is not," Victor Poleo, a professor in the graduate program on the oil economy at Venezuela's Central University, told Inter Press Service.
Global demand for oil increased from 66.2 million barrels per day (bpd) in 1990 to 79.7 million in 2003, Poleo pointed out. Average annual growth of 900,000 bpd increased consumption by 13.5 million bpd in less than 15 years. But in 2003 alone, demand grew by 1.4 million bpd.
China has been one of the main forces behind the growth in demand. Last year it consumed 6.4 million bpd, up from just 2.4 million in 1990. The former Soviet Union, on the other hand, used 8.4 million bpd in 1990 compared with a mere 3.2 million in 2003.
"If demand in Russia and the countries around it had remained steady, the world would now be consuming 85 million barrels a day of oil, and prices would be even higher," Poleo said.
According to him, these "are the days of the Organization of Petroleum Exporting Countries [OPEC], and especially its swing producer, Saudi Arabia, which is capable of fluctuating its output so that it ranges from 8 [million] to 12 million barrels a day".
OPEC is made up of Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, the United Arab Emirates, Venezuela, Iraq - which is excluded from the group's quota system and from decisions on increasing or cutting output - and Saudi Arabia, which has one-quarter of the world's known oil reserves, estimated at slightly over 1 trillion barrels.
The Persian Gulf region alone accounts for 65 percent of the world's proven reserves.
A scandal at Royal/Dutch Shell, however, has led to downward revisions in estimates of the world's oil reserves. The Dutch-Anglo oil giant, which for years had overstated its oil and gas reserves, has been forced to downgrade its proven oil reserves several times in the past few months, by a total of 20 percent, or nearly 4 billion barrels, especially regarding its oil fields in Oman.
Moreover, world-renowned British oil geologist Colin Campbell, with the Association for the Study of Peak Oil and Gas, said the Gulf countries likely have lower reserves than what they have reported up to now.
Campbell says Saudi Arabia probably has 210 billion barrels rather than the 261 billion it claimed when it presented the state oil company Aramco as capable of producing 15 million bpd for 50 years.
Iraq, whose oil industry has been seriously affected by the March 2003 US-British invasion and the subsequent occupation, is likely to have 90 billion barrels rather than the previously estimated 112 billion; Kuwait's estimates probably are closer to 55 billion than the 90 billion reported up to now; and the United Arab Emirates probably has 60 billion instead of 98 billion, Campbell said.
"Perhaps the Arab producers got carried away when they overestimated their reserves in the 1960s and 1970s, almost by decree," said Francisco Mieres, an oil-economy professor and former Venezuelan ambassador to Moscow.
As evidence, Alberto Quiros, a former president of Royal/Dutch Shell in Venezuela, cited studies showing the rapid depletion of Saudi Arabia's large oil fields, such as Ghawar - which produces 5 billion bpd - Abqaiq and Berri, all of which are in the east-central part of the country, near the Persian Gulf.
The depletion of these reserves puts the kingdom in the difficult position of deciding whether or not to exploit mature oil fields, at a higher cost, in order to maintain its potential.
According to Quiros, new and intense development of oil fields in Saudi Arabia would demand investment above and beyond that programmed by the Aramco oil monopoly, and perhaps Riyadh does not want to increase investment at the pace required by the United States, in the context of complex relations between Washington and the kingdom over the conflict in the Middle East.
Poleo said the root of the problem is that the US "is a terminal victim of its energetic metastasis. It has neither the oil nor the natural gas needed to feed its style of development. With just 6 percent of the world population, it consumes nearly 25 percent of the oil and gas produced worldwide."
There were expectations that demand for petrol in the US would stabilize at around 7.2 million bpd by the mid-1990s, "but that didn't happen", said Poleo. "The United States' voracity for petrol rose to 9 million barrels [per day] by 2003, one of every two liters burned in the world."
And demand for crude oil and other sources of energy will only continue to grow. Currently, the United States imports six of every 10 barrels of oil and two of every 10 cubic meters of gas that it consumes. By 2020 it will import eight of every 10 barrels of oil and four of every 10 cubic meters of gas, according to US government reports.
The International Energy Agency, which represents industrialized countries, estimates that by 2030, conventional oil output will have reached a limit of 100 million bpd, but by then, the world will be in need of 120 million bpd. "The gap will be filled by non-conventional oil, and then by coal," predicted Quiros.
Non-conventional oil includes extra-heavy crude and bitumen, which are found in large quantities around Athabasca in west-central Canada and in the Orinoco strip in southeastern Venezuela, where 270 billion barrels of probable reserves can be added to Venezuela's 78 billion barrels of proven reserves.
Demand - and along with it, prices - have been driven up by the growth of markets in places such as China and the rest of East Asia and by reduced expectations of an expansion in global supplies. Mexico, Canada and Equatorial Guinea have added modest volumes to their output, while North Sea production (Norway and Britain) is in decline.
There are still large deposits in the Caucasus and Siberia: Russia has one-third of the world's natural-gas reserves and 60 billion barrels in crude-oil reserves. "But to extract hydrocarbons from the Caucasus, oil and gas pipelines must pump fuel great distances through turbulent regions, which drives up the risks and costs," said Professor Mieres.
Pumping oil and gas to China, for example, would involve crossing the northwestern autonomous region of Xinjiang, home to Muslim Uighurs, who have a conflictive relationship with the central government, he noted.
There are also abundant reserves in the extreme north of Russia, such as Murmansk and eastern Siberia, but the oil would have to be pumped and transported to the markets of Europe and the US in near-glacial climatic conditions, at an equally high cost.
Michael T Klare, the five college professor of peace and world security studies, based at Hampshire College in Amherst, Massachusetts, warns that pressure on supplies and fuel shortages will become increasingly severe. And it's not just the the major reserve holders that will be affected.
Poleo believes that the growing need for oil and gas will have an impact on South America, because the "Andean arc", an area of natural gas, conventional oil and heavy-crude-oil deposits that stretches from Trinidad and Tobago to Bolivia, holds the world's third-largest reserves, after the Gulf region and the Caucasus.
Campbell, with the Association for the Study of Peak Oil and Gas, warned that there are only a few large oil fields yet to be discovered in the world, because 90 percent have already been found. And he added that with demand growing at 2 percent a year, a bottleneck will begin to be reached in 2010, after which prices will get higher and higher.
For his part, Poleo asks, "What are high prices? Three decades ago, a barrel of oil cost just over $2, equivalent to $30 today" - a result of average inter-annual inflation of 1.3 percent in the US since 1974.
OPEC, according to sources at its secretariat in Vienna, has a "parallel price band" for its basket of crude oils that is higher than the official band of $22-28 a barrel. It is under huge pressure from the United States, however, which is demanding lower prices to shore up the US economy.
And by now, most experts agree that above and beyond price swings, the era of cheap oil that "brought OPEC to its knees", in the words of former US president Ronald Reagan, is coming to an end.