Underlining their concerns, oil rose to a new record above $143 a barrel on Monday, as expectations of a weaker dollar spurred investors to buy dollar-denominated oil futures as a hedge. Light, sweet crude for August delivery was up $2.13 to $142.34 a barrel in electronic trading on the New York Mercantile Exchange by afternoon in Europe after rising earlier to a record high of $143.67.
Oil's new peak underscored the somber tone of the conference's opening session. While speakers expressed hope that prices will stabilize after more than tripling over the past three years they agreed that they are unlikely to return to their 2005 levels.
"We need a global effort to improve our resilience," Piebalgs told delegates packing a cavernous plenary hall, while acknowledging that "there is no silver bullet" to lower prices, ease concerns about supply and reduce speculative investments propelling markets upward.
BP CEO Tony Hayward warned against hopes that present high prices are a bubble that will burst the same way that they did in the 1970s, saying the supply and demand picture had changed since them.
"The era of cheap energy is probably over at least for the medium term," he said.
"The last time oil prices surged to this level, new production from the North Sea and Alaska helped bring prices down," but now there are no new sources of "easy oil" to compensate, he said. Instead, said Hayward, OPEC production fell by 350,000 barrels a day last year - although demand has grown for five consecutive years - and in Russia, "production has started to decline."
While agreeing with Hayward that there was enough crude in the ground, Shell chief Jerome van der Veer acknowledged it was time to focus more on "difficult oil" - unconventional methods of recovery that are costlier and more complicated than the normal drilling process - to meet growing demand.
"There is hardly any additional access to easy oil," he said. "Most of the new supplies will be difficult oil."
Producers and refiners in the Spanish capital will be struggling to find answers not only on how to ensure stable supply, but also on doing it in a way that minimizes emissions of the greenhouse gases believed to cause global warming.
Repsol's Antonio Brufau touched on the task facing energy producers, saying their challenge was "to produce more oil and to deliver ... products with stricter environmental standards." He and the others emphasized the importance of carbon trading and storage as strategies for the future.
Still, with oil bouncing from high to higher, the primary concern at the meeting was over availability and prices that are propelled higher by a potent mix of developments.
There is the weakening U.S. dollar; each time it loses traders buy oil as a hedge; and dollar appears set to fall further with Europe possibly moving toward interest rate increases as low U.S. rates stand firm - trends that will see more investors abandon the American currency.
Adding to oil's more than twofold price increase in the past year is rising demand, particularly in fast-growing economies such as China and India. Supply interruptions in the Middle East and Nigeria have also contributed, as has falling production in Mexico. And tensions over Iran, OPEC's second-largest producer, have added to volatility.
In Jeddah, Saudi Arabia, earlier this month, the kingdom said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels. But that pledge disappointed the U.S. and other major consumers arguing that supply is not keeping up with demand, even as the Saudis and other OPEC members blame speculators and the swooning dollar.
Although the Saudi and other OPEC oil ministers are among the more than 3,0000 registered participants they are not known to be carrying any solution to be presented while in Madrid. That has lowered expectations that any decisions here will soothe the market.
