Former Saudi Aramco CEO Warns of Oil Price Spikes

The U.S. and other economies may soon face vicious energy price spikes if governments pursue policy barriers to oil, coal and natural gas investment, the former chief executive of the world’s largest oil company warned Thursday.

Policies such as increased taxes, dwindling resource access and penalties for emitting greenhouse gases – all actions President Barack Obama has prioritized – could spell a commodity market meltdown such as seen last year, cautioned Abdallah Jum’ah, who retired as CEO of Saudi Aramco late last year.

“The current market situation and an unattractive investment environment could mean potential supply demand imbalances down the road, and with them, another cycle of vicious petroleum price spikes,” Jum’ah told a U.S. Export-Import Bank conference here.

Although world demand has plummeted following the global financial crisis and is expected to fall more than 2 million barrels a day on average this year, the former Aramco CEO said, demand growth will speedily return when national and regional economies – particularly powerhouses such as the U.S. and Europe – recover.

While developed countries may increase energy efficiency to smooth the demand curve, the biggest growth in consumption will again come from such developing countries as China and India, whose combined populations represent over a third of the world’s inhabitants.

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