Spencer Abraham

By RABIN GUPTA

doha • The long-term trend as far as oil prices are concerned is that they will rule at the present levels or may possibly go higher.

Former US energy secretary Spencer Abraham told The Peninsula yesterday that he doubted prices would fall given the current levels of demand which was also growing at a rapid pace.

Abraham served as Energy Secretary in the George W Bush administration from 2001 to 2005.

He said: "It is clear to me that real spare production is significantly less that it has ever been. It is now near peak season, and there is not much (spare production) left."

Abraham attributed the growth in demand on limited production capacities. "Developing countries will keep the market tight for some time to come and so one can expect upward pressure," he said. Markets like China, India and Brazil with their roaring economies have shown a continuing thirst for oil leading to the tightening of the market if not competition for very barrel produced.

"There will be significant growth in the middle class in the nest two decades (in these countries). It will be harder to meet production requirements as well as demand," he said.

This scenario will inevitably lead to alternative sources of fuel, like LNG and nuclear power even as the world is becoming more aware environmentally. Speaking on the US' strategic reserves, Abraham said: "It is pretty much full," estimating the ideal storage amount to be around 700m barrels.

"The amount is sufficient. People should realise that strategic reserves are not there for manipulating the market but for national emergencies," Abraham stated.

He declined to comment on a question on whether there is or was any case of `cheating' on production quotas on the part of Opec producers.

Spencer was in Doha yesterday in his capacity as Chairman and CEO of the Abraham Group, an international strategic consulting firm which assists clients seeking opportunities or solutions in the US and global markets.