The new president of the U.S. put this policy at the center of his election campaign and after entering the White House did deliver on the promise to put billions of dollars into ‘green energy’. The size of the investment surged because the sector was seen as a prudent way to create jobs as part of the near $800 billion stimulus package.

I would be the last one to argue against money being invested into alternative energies, invested in conservation or for that matter efficiency in the fossil fuel sectors. The final category is rarely discussed as we assume that national oil companies (NOCs) or the major international oil companies (IOCs) are getting what they can out of each barrel in the ground, despite suggestions otherwise by some industry insiders.

At the 4^th OPEC International Seminar held in the imposing Hofburg Palace in Vienna, OPEC oil ministers and chief executives from five major NOCs looked into their crystal balls to see how they can best plan for the near and medium term.

The oil minister of the world’s number one exporter Saudi Arabia, Ali Al Naimi told us in an interview the market is close to being in balance; OPEC has put a floor under prices and that “from a material point of view I believe we have made enough cuts." That was a relief to struggling global economies who feared that OPEC producers might try to cut one more time to boost prices. But it is not all clear sailing in this environment.

The veteran oil minister and former OPEC President Rilwanu Lukman perhaps summed up the challenge at a speaker’s dinner on the eve of the seminar by saying “We need to know where the heck we are going.”

Where are we going after the cliff-like drop from $147 to $40 in the last eight months? After taking notes during the chairing of this seminar and talking to ministers on the sidelines, it would appear we collectively (producers and consumers) are doing some poor planning.

John Lipsky of the International Monetary Fund said the perfect storm of a cyclical downturn together with a financial crisis will mean that the dislocation of the global economy will much more severe than we have seen since World War II.

While OPEC did the right thing (to paraphrase the Spike Lee movie title ten years ago) by holding production steady after record production cuts in the fourth quarter, if prices do not recover as member producers hope by the end of the year, it seems clear that $100 will be back by 2013.

Presentations from the Riyadh based International Energy Forum and the Paris based International Energy Agency point to a supply/demand crunch already underway. $40-50 oil is providing a stimulus to the global economy of $1 trillion versus $100 oil last year, but all the participants here suggested that at the same time oil producers, as a result of lower revenues, will stall further investments. The basic sums for them do not add up right now. With three-quarters of proven reserves in the hands of OPEC members (primarily in the Gulf) they are being selective about their investments and financing development of non-oil priorities; the basics like schools, hospitals, roads and yes alternative energies.

The Secretary General of OPEC Abdalla El Badri told us during an interview “We cannot invest in any future capacity. This is not viable.”

The bill to get daily production up to add 64 million barrels a day of capacity needed by 2030 is now estimated by the IEA at $26 trillion dollars. Energy demand is expected to rise 45 percent in that time frame. Yes they are suggesting Brazil, Russia, India and China, the Middle East and Southeast Asia will bounce back robustly in the next two to four years and march upwards from there.

That sort of growth would be welcomed in the medium term, but until that happens we can expect some real near term problems. First and foremost, who will finance the $26 trillion dollars or say a quarter of that in the next five years if banks are clogged and national oil companies want to hold onto a greater share of revenues from the crude they own? This is the trillion dollar question. International oil companies have plenty of cash on hand to co-develop fields in oil wealthy, but cash poor oil nations, but it is not clear they will be welcomed with open arms. We have all witnessed what transpired in Russia with the re-working of elephant field projects. Shell and BP are paying a high price in that process.

Jeroen van de Veer the Dutch CEO of Royal Dutch Shell avoided the thornier joint projects and instead looked at other successes in Russia, Nigeria and Qatar, but he did outline the “new rules of the game.” It involves greater interdependence of consumers and producers and the same of IOCs and NOCs. Confrontation leads to delays; production delays lead to volatility and in the end consumers pay the bill for poor planning and friction.

While this dance to greater interdependence just begins, it was fascinating to witness how dependent this group remains on the daily price of crude. Five oil ministers and one chief executive all perked up when one of their peers quoted the latest quote from the floor of the New York Mercantile Exchange while at dinner. $49.70 was the latest price -- $4 higher since OPEC decided to leave production where it is.

Oil prices rose alongside the stock market rally. The market rally was linked to the first hopes of an economic recovery in a long while. While the rhetorical gap between producers and consumers may seem at an all time high, the reality is interdependence has never been greater.

Posted by CNN's John Defterios: 10:37 AM

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