RIYADH, May 31: The problem with oil is that it was too low priced in past, argues Dr Ramzi Salman, the adviser to Qatar’s Deputy Prime Minister and Minister of Energy and Industry, who had also served as deputy secretary general of Opec from 1991 to 1997. The current high price of this precious, finite commodity is definitely not the issue, he asserts.

Dr Salman was in Karachi last week participating at the 4th Pakistan Oil and Gas Conference (POGEE). He remains an insider who has been involved with the industry for almost five decades now.

Energy is an extremely high stake game no one argues. And the stakes are so big that the outcome ultimately determines the course of history. Michael Collon very rightly says: “If you want to rule the world, you need to control Oil, All the Oil, Anywhere.”

Dr Salman emphatically believes that in real terms, oil prices today are not higher than in 1981 as he maintains, that in the meantime, the real prices of oil have not gone up. He reiterated, “this is the crux of the problem. People are simply not accustomed to it. Had oil been more expensive in past, true to its market potential, people would not have been complaining today.”

And this would also have also promoted efficient use of energy and would have taken care of the sheer wastage of energy that we see today. The current market prices are very much in tune with the correct value of oil, he strongly argued.

Crude markets have been moving with the gold market movements. “Gold and oil are going up and up together. This is a natural phenomenon in order to maintain the purchasing power of the oil producers.” Indeed his comments hints at the current mode of thinking within the Opec oil producers.

And Dr Salman went on to emphasise that the increasing output would also not be of any help to the markets. “Increased oil production by Saudi Arabia (or any one else) will make no difference,” he said. “There is no demand for heavy crude currently available with Saudi Arabia.”

He also made it clear; Opec would not be inclined to increase output further until it is ensured it would be compensated for any idle capacity. He was indeed referring to the issue of demand security too, as demanded by the Opec producers to make huge investment in the industry attractive and feasible.

Referring to the reasons behind the price spiral, he clarified that oil producers were not responsible. “Geo-politics, tension, processing costs and government taxes were behind the rising gasoline prices in many countries.”

Blaming lack of refining capacity too for the current market scenario, Dr Ramzi added, “If six refineries started production now, oil prices will go down to $50 per barrel.” He added: “speculative trading in oil futures were also contributing significantly to the increase in the prices.”

In view of the growing gap between the demand and supply of energy for medium income, emerging, energy deficient economies like Pakistan, the issue of energy security, defined as energy availability at all time, for all needs, at affordable prices.

Emphasis seemed to be moving towards managing wasteful consumption especially in space heating, water heating and household use of electricity. Alternative modes of energy too went up for discussion at the conference in Karachi with emphasis on exploiting the geo-thermal energy resources and enhancing regional cooperation so as to meet the needs of energy deficient countries in the region.

Raghuveer Y. Sharma, the Lead Financial Specialist at World Bank hence seemed to be pushing the case of energy deficient Pakistan cooperating with Afghanistan and its two hydro-rich Central Asian states, Tajikistan and the Krygyz Republic for the development of a Central Asia South Asia Regional Electricity Market (CASAREM).

However, in his presentation there was no mention of the Iran-Pakistan-India gas pipeline, apparently more for geo-political considerations than basic economics.