Naimi said "Current oil market conditions are largely a reflection of the negative impact of the global economic downturn, rather than an indicator of things to come. While we do not know exactly when -- whether later this year or the next -- we can be certain that this recession will end. And when the 'green shoots' of recovery begin to take root, the combination of a growing global population and the pent up yearning for prosperity in developing economies, will drive the need for significant energy supply growth in the decades ahead -- much of it from fossil fuels. Meeting these future energy requirements will be complicated by a number of factors, including: growing concerns about climate change, differing definitions of energy security on the parts of both consumers and producers, imperfections in the workings of energy markets and various above-ground constraints on deliverability. While the hydrocarbon resource base is ultimately finite, this is not a short- or medium-term issue as its massive size will not impose constraints on supplies for many decades to come. In the short-term, the low price, low demand environment discourages substantive investment in petroleum development and infrastructure. High development costs and tight credit markets are compounding the difficulties. Furthermore, policies advocating a rapid shift away from oil to unproven alternatives are fostering greater uncertainty and investment risk. Capital dislikes uncertainty, and lack of clarity related to energy policies may serve to exacerbate the trend of underinvestment in the oil industry. Unintended consequences from policies now under consideration could disrupt the functioning of global energy markets, impact economic growth and ultimately lead to an energy situation that is less secure than what we have today. In the midst of this policy uncertainty and market turbulence, Saudi Arabia continues to invest in new capacity across the ups and downs of the business cycle. We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions. While some in the industry have delayed or canceled investments, we are continuing to invest now in both the upstream and downstream to help ensure an uninterrupted supply of energy when the global economy recovers. However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008. While supply-side investment is critical to a global energy security, I also believe that a core feature of any energy strategy must be policies to promote increased energy efficiency and conservation. Using our existing energy resources more wisely is a critical step toward greater stability and sustainability. Policies to promote conservation and efficiency are robust across any energy future price scenario and will be the cheapest form of “new energy supply” in many cases. We must pursue a “balanced approach” which recognizes that in order to achieve progress on energy security, economic development, and environmental goals, the linkages and disparities among them must be understood. A singular focus on one goal may undermine our efforts to achieve our other goals. --MORE
