Piebalgs warns of looming energy crisis

BRUSSELS, May 11 (UPI) -- Energy-sector market fundamentals are unchanged despite low prices, setting the stage for an energy crisis once the economy rebounds, European officials said.

Oil prices on the world market have entered bullish territory as the economy shows modest signs of recovery. The global recession, however, has provided some relief in declines in the energy sector, with oil giving up around $100 from its July highs of near $147 per barrel.

European Energy Commissioner Andris Piebalgs warned that this provides a false sense of relief as low energy prices translate to stagnating investments, which may hurt long-term efforts toward efficiency and diversification.

"These investments take decades to be accomplished," he wrote on his Web site. "In consequence, if the current economic crisis finished and demand recovers, we could be facing huge shortage of supplies that can lead to extremely high prices."

Piebalgs pointed to statements from the International Energy Agency claiming oil could rebound to $200 per barrel over the next four years.

He said the current low prices in the energy market provide an opportunity to explore alternative-energy sources in an effort to reduce global oil dependency.

His comments echo the 2008 European Union Energy Security and Solidarity Action Plan, which called for a 20 percent reduction in greenhouse-gas emissions, a 20 percent increase in the use of renewable-energy resources and a 20 percent improvement in energy efficiency over the next two decades.