Consumers are feeling the effects of soaring energy prices and the industry is grappling with the larger issue of crude oil supplies. Oil companies like ExxonMobil are making record profits, but the cost of investments in oil exploration is rising as global demand increases. Executives at the CERAWeek energy conference suggest this could be the most serious problem facing the global economy. ExxonMobil's Senior Vice President Stuart McGill says the notion of energy independence must be dropped and governments will have to work together to meet the demands.
"By building stable regulatory frameworks, establishing a level competitive playing field, granting access to resources, removing obstacles to development and opening markets to trade, governments enable international oil companies, national oil companies and other industry participants to fulfill their role in making energy available and affordable."
McGill says the market is also affected by fluctuations that consumers quickly see and feel. He says the reality is that since 1985, the price of West Texas Intermediate crude has increased eleven percent, far less than many other commodities.
"Over the last 20 years, the price of nickel has increased by 66 percent; the price of copper by 43 percent and the price of sugar by 33 percent. Public perception of fuel prices, however, is tied more to price volatility than to absolute price levels."
McGill says oil companies are using their earnings to invest in future needs, but the market is too unstable and something must be done to bring the price of oil in line with the demand for new supplies. It's estimated that oil demands will grow by 20 percent by the year 2025 and industry experts say conventional supplies won't be sufficient to meet that demand. Laurie Johnson Houston Public Radio News.