Oil Producing Countries See a Grim Future for Themselves

(MoneyWatch)  Those who believe the oil industry interferes with renewable energy finally have solid evidence for their fears, but not against the major Western companies like Exxon and Shell that usually take the blame. The Organization of Arab Petroleum Exporting Countries (OAPEC) has come out against the policy of other governments on climate change and renewable energy in a newly-released study.

OAPEC says that investment in renewables will "deprive the traditional energy sector, including oil and gas, from funding needed for capacity expansions," which could cause damaging swings to future prices. Investment in renewables could cripple the oil industry's ability to increase its own spending, ultimately leaving the world with an energy deficit.

Oddly given the hostility to renewables, among OAPEC's members is the UAE, one of the world's biggest oil exporters and also home to Abu Dhabi, which is investing large amounts in a local renewable energy project called Masdar City. Other members have also expressed interest in alternative energy, and the entire region has great prospects for solar power. Furthermore, most of today's efforts toward renewables won't do much to remove demand for oil in the immediate future.

What really has the oil producers feeling defensive may not be biofuels and solar panels, but the recession. A Newsweek article titled The Decline of the Petro-Czar speculates that countries like Russia and Venezuala are suffering from oil prices far below last year's levels. Countries until recently confident that they would enjoy steadily rising prices are now teetering over the abyss, and nobody wants to cut their output to raise prices.

It seems likely that what is getting under OAPEC's skin is the knowledge that they can't properly invest their own money in new oil exploration while they have their old infrastructure and social spending levels to maintain. It's not that they think renewables are the future devil that will keep their economies constrained; they're more concerned that they won't be able to cash in on future price rises.

Despite the collective concerns of OAPEC's constituents for their own hides, someone will certainly be able to profit from high prices in the future. Which may be why four of the biggest private oil companies are all maintaining or increasing their own large capital spending plans. What's bad for OAPEC may end up being good for Western companies.