In an interview recently conducted with Barack Obama, during a meeting of the American Automobile Association (AAA), the U.S. President said that current oil prices are about $ 20-30 more than their normal expected price. The reason for this, amid current market fundamentals (i.e. the equilibrium of supply and demand) is the dispute with Iran and instability in the Middle East. Obama also said that increased prices are also due to growing demand for oil in countries such as India and China, as a result of their sustained economic growth, and he gave the example of China where the number of new cars sold had reached 80 million in 2010. With rising living standards, especially in emerging and oil-producing countries, and growing cities and increased nembers of people who come to live in the suburbs, car sales are rising steadily. This means that the consumption of gasoline and diesel will grow progressively, in spite of global economic crises in recent years. The best proof of this can be found in the information recently released by international associations that collect data on the number of cars, vehicles and other types of transports. Information published by Nation Master, for example, shows a rise in the number of cars and vehicles on roads worldwide in 2011, to exceeding one billion units, or 1.166 billion to be precise. This increase took place in production and consumption during one of the greatest economic crises the world has seen since the Second World War, and despite high gasoline prices. This means that consumers will remain in need of their cars despite the economic pressures they are facing. The reason for this is the lack of public transport facilities amid demand for transportation solutions, as well as the comfort and flexibility that private cars offer in daily commuting or travel, whenever the opportunity arises. And according to Scotia Bank's annual report on the global automotive market, sales are continuously growing, registering a growth rate of six percent in 2011 compared to 2010, while car sales in the United States amounted to about 14 million units. The data above indicates that high oil prices are due to key factors (increased demand, because of rising standard of living in emerging and developing countries), in addition to other emergency factors (the crises in the Middle East), in addition to speculation which attracts more investment during crises. This information shows that the crude market, despite the availability of many alternative energy sources, and despite the many attempts to have the latter replace crude oil, continues to grow steadily as long as there is high demand in the transportation sector, and as long as the latter continues to rely on conventional fuels. It is clear that conventional fuels will continue to dominate this sector until further notice, despite the growing number of electrical and hybrid cars being currently produced. However, the overall number of these cars that rely on new fuels remains relatively limited, -numbering in the thousands-, while the number of cars that operate on fossil fuels has exceeded one billion. Competition between the new and old types of fuel remains relatively limited, as the cost of producing cars operating on new fuels remains high compared to conventional types of cars. Furthermore, the new types need the support of the government through tax reductions that render them more competitive. This is added to other additional costs, such as the need to build special stations equipped to receive and service the cars that operate on the new types of fuels, not to mention the construction of the necessary facilities for them, such as fuel storage tanks. All this means extremely high cost which must be taken into account in the economics of the new types of cars. Nevertheless, one must not underestimate the efforts and research underway to develop new fuels and to make them more competitive with conventional fuels. However, among the most important causes of the advances made by the new types of fuels remains the global protest against the environmental damage the citizens can sense in many countries around the world, when it comes to the role of hydrocarbon fuels in pollution and greenhouse gas emissions -whether these claims are established or not. It remains important that the current impression, for millions around the world, is that the fuel used in transportation is the main reason behind harmful emissions, despite the various scientific opinions in this area. For this reason, a major responsibility must be shouldered by oil-producing countries to collaborate in a broader and more extensive way with international companies and laboratories to provide a more ecofriendly fuel, despite the fact that this requires concerted human and material efforts. But since the transportation sector is the main remaining oil-consuming sector, it is wiser for the producing countries to begin collaboration with specialists in the field in earnest in order to move forward. In tandem with efforts to discover new fields, necessary institutions must therefore be developed within the national oil companies to hire an adequate number of specialists to improve the quality of gasoline. This is in addition to funding for research, with a view to provide clean fuel that meets people's needs and can compete both economically and ‘psychologically' with the new types of fuel. This is in the event of continued international reliance on oil in transportation, which is becoming rather clear now with the annual increase in car sales. Several years ago, European Union nations decided to develop diesel fuel, and produced ‘green diesel'. Indeed, this type of ecofriendly diesel dominates the market of vehicle fuels in Europe today, boosted of course by the competitive prices of the other types of fuel. So will the oil producing countries be able to allocate some of their financial resources to promote and improve ‘green diesel'? This is in order to avoid a major crisis with consumers around the world, which is in no shortage of supplies, in anticipation of increased protest against conventional fuels, which consumers believe are the worst polluters of the environment. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
