Storm on the Horizon

"An oil crisis is coming in the next 10 years," John Hess said at the annual Cambridge Energy Research Associates CERAWeek conference in Houston. "It is not only a matter of demand. It is not only a matter of supply. It is both."

The number of vehicles in China and India is projected to grow exponentially by 2050. So demand for fuels derived from oil shows no slack despite relatively flat U.S. demand amid the nation's economic slowdown, he said.

The world is consuming about 86 million barrels a day, and analysts expect demand to grow by about 1.5 million barrels a day each year, the International Energy Agency said.

"Recessions may interrupt this growth, but only temporarily," Hess said.

Hess also noted that increased investment is crucial because the Organization of the Petroleum Exporting Countries doesn't have the cushion it once had to protect against supply disruptions. OPEC pumps 40 percent of the world's oil.

In 1985, he said, OPEC had 10 million barrels of spare capacity. Today the cartel has an estimated spare capacity of 2.5 million barrels.

Mr. Hess' colleagues sounded more reassuring about their ability to meet demand, but they also said people will have to pay more money and exert more effort to get the energy they need in the future.

"The supply challenge is really not one of scarcity as some believe," said Exxon Mobil Corp. senior vice president Mark Albers.

Exxon predicts global demand for crude oil will rise around 40 percent by 2030.

Mr. Hess said individuals and governments must address rising demand by conserving energy. The leaders of some of the world's largest energy companies were responding to the theory that people have used most of the oil that's easy to recover, and shortages will soon follow.

"We cannot afford to abandon fossil fuels and still deliver the volume of energy needed to sustain the world's economic and social level, to alleviate global poverty," he said. "Alternatives are simply not ready to shoulder the load. Nor will they be in a position to do so any time soon."

The men didn't predict future oil prices. Mr. Hess spoke of "healthy" oil prices ? that is, price levels to support enough production to meet demand.

Many of the presenters at the conference said oil prices could drop as low as $60 a barrel, but they aren't likely to go as low as the levels of the late 1990s, when crude traded around $10.