There is a consensus among oil experts and the top officials in the international oil industry, that demand for oil and gas and fossil fuels will increase in tandem with global economic and population growth. As such, leading executives at international oil companies are in agreement that the alternative energy currently under development will not replace fossil fuels, i.e. oil, gas and coal. This is because there is room for all sources of energy in the market, in light of the growing global consumption. Thus, every American president's promise at the beginning of his term, to fund the development of alternative energy to meet the growing needs of the largest energy consuming market in the world and to replace oil, - so that the US becomes independent of Middle East oil supplies-, is an illusory promise at best. Last week, the heads of Total and British Petroleum, Christophe de Margerie and Tony Hayward, said that oil production will reach its maximum capacity by 2030, and added that 60 percent of the world's future needs will continue to be met by fossil fuels up until 2050. BP's Hayward also said that demand for energy will peak in 2020, ranging between 95 and 110 million barrels per day, while de Margerie, the CEO of Total, said that oil and gas will remain the primary source of energy that will meet the growing demand. He added that while the alternative energy currently being developed has a place on this consumption's map, it will not be an alternative to fossil fuels. At the beginning of the month, Aramco's CEO Khaled al-Faleh, said that the world's production of oil will increase by an average of 1 million barrels per day henceforth and until 2030, and that international oil production will rise to 105 million barrels per day from its current rate of 85 million barrels per day. Al-Faleh added that an additional 50 million barrels per day of productive capacity should be made available over the next 20 years, as a total of 30 million barrels per day will be depleted due to the declining productive capacity of oil fields. This confirms that oil prices cannot return to a level lower than $60 or $70 for the barrel, since it will be difficult to invest and discover more oil in areas with high costs, such as Canada's sand tar deposits, Brazil's maritime fields, or Venezuela's heavy oil, which is now being extracted. Meanwhile, modern exploration technologies, which can be used to look for oil at sea or in sandy areas, are seeing progress. It is said that around 50 million barrels of oil have been discovered in Brazil, and in Alberta, Canada, Total announced that its cost of production for oil had dropped by 20 percent. It is thus clear that if oil prices fall lower than the level of $60 a barrel, investment in more energy, which the world needs, will be halted. Then, demand will outstrip supply and the world will enter a new cycle of oil price fluctuations, where sudden rises and falls hurt the global economy. The current level of oil prices, at around $60 a barrel, has become a proper minimum level below which oil prices would not be optimal. In the past, it was said that oil producers feared a big rise in prices because it would affect oil use, and prompt consuming countries to search for alternatives. Today, everyone knows that the alternatives are expensive, and that when oil prices rise above a certain level, this will help boost oil's place in the world, because a price rise can make oil more expensive to discover. Thus, there is a prevailing belief that oil prices will not return to their former very low levels, as they have in the past, since demand is increasing at present and this justifies price levels higher than $60 a barrel. Saudi Arabia's decision to adopt a price level of $75-85 per barrel as a fair and reasonable level is thus based on the reality of the world's oil and economic situation.
