Demand for oil worries Saudis

DAMMAM, Saudi Arabia – The world’s only oil superpower boosted output last month, launching a pair of projects that are part of a massive $55 billion endeavor to keep pace with the world’s ever-growing thirst for oil.

But demand for the world’s premiere source of energy is rising so fast – by about 2 million barrels a day each year – that even Saudi Arabia’s vast resources will be unable to cope without drastic help, oil executives and analysts say.

Remarkably, even Saudis, who control over a quarter of the world’s known oil, are calling for relief from relentless consumption.

“The current out-of-control demand is not good for us,” Ghazi Al-Rawi, head of private equity at Gulf One Investment Bank, said. “When you have this kind of demand, you’re forced to supply beyond the optimal rate. That’s not a positive thing.”

Most urgently needed is energy conservation, especially in the United States, which now burns up a quarter of the oil sold to the world, said Saddad al-Husseini, the former head of production at state-owned Saudi Aramco.

Also critical is the development of fuels from oil-rich sands or natural gas that can act as substitutes for oil. Other producing countries – especially OPEC’s No. 2 and 3 leaders Iran and Iraq – could ease the crunch by boosting exports to handle a greater share of the surging demand in China and India, Saudi experts said.

If help doesn’t materialize and Saudi Arabia maxes its output – cranking out perhaps 35 percent more oil than it does today – the kingdom’s proven reserves might only sustain those gushing flows for a couple of decades before starting to dwindle, al-Husseini said.