Substituting the current energy infrastructure will be prohibitive in the short term and given the massive scale of the global energy system, a rapid change to alternative energy will be costly and impractical, al-Naimi said yesterday at an energy summit in Houston organized by the Cambridge Energy Research Associates.
While the push for alternatives is important, we must also be mindful that efforts to rapidly promote alternatives could have a chilling effect on investment in the oil sector, al-Naimi said in a speech on Achieving Energy Stability in Uncertain Times on Tuesday, according to Reuters.
A nightmare scenario would be created if alternative energy supplies fail to meet overly optimistic expectations, while traditional energy suppliers scale back investment he added.
Al-Naimi’s remarks come in the midst of an effort from U.S. President Barack Obama to change the energy policies of the previous administration and trigger billions of dollars of investments in alternative energy such as solar, wind and hydrothermal. Obama considers renewable energy as a key part of his stimulus recovery plan to create jobs and to help the economy recover.
Still, Mr. Naimi acknowledged that the world was probably headed towards a transition away from fossil fuels but said he wasn't clear which fuels or technologies would become economically sensible as a replacement for crude oil.
Saudi Arabia is the largest oil exporter in the world and is one of the major members of the Organization of Petroleum Exporting Countries. The country plays a significant role in advancing the stability in world oil markets by keeping the market well supplied and maintaining proper spare capacity, Al-Naimi said according to CERA.
During his remarks, al-Naimi explained about the detrimental and unsustainable volatility of oil prices in 2008 but noted that whereas the recent past was all about risk and high returns, the present focus is on stability and survival, he said, according to the CERAweek website.