'Future of oil' in focus in Congress
House panel scrutinizes industry oil forecast and sees 30% increase in demand over next two decades.
NEW YORK (CNNMoney.com) -- Experts projected that demand for energy will continue to grow and called for the use of biofuels and other measures to respond to the nation's energy crisis, at a committee meeting in Washington, D.C., on Wednesday.
"The heat has slowly been turned up on the American consumer and now they are being boiled alive," said Rep. Edward Markey, D-Mass., chairman of the Select Committee on Energy Independence and Global Warming. "The same can be said for our planet. A fundamental change is needed in the way America uses energy."
"We cannot drill our way out of this crisis because we simply don't have the reserves," said Markey, adding that demand will increase 30% over the next two decades.
Markey said that Americans should be using more hybrid cars, biofuels and public transportation.
The meeting is set to focus on the prognosis for international oil supply and demand in the coming decades, according to the committee. The committee said it is trying to provide an accurate projection for prices, given the wide disparity between analysts, some of whom project $200 a barrel.
Adam Sieminski, chief energy economist for Deutsche Bank, projected that oil prices will drop to $105 a barrel next year, and will eventually "settle" at $85.
But despite this, Sieminski believes that demand will increase, to 97 million barrels a day in 2015 and 111 million barrels a day in 2030, from its 2008 level of 87 million. He said that most of the production growth will come from OPEC, which will produce 45 million barrels a day in 2015 and 55 million in 2030, up from 35 million in 2008.
To meet growing demand, Sieminski said production will rely on non-conventional sources.
"Future projects are likely to be more complex and remote, resulting in higher costs per unit of energy produced," he said, in prepared statements.
Nonetheless, Sieminski said he believes that supply will increase, and this will drive down prices.
Guy Caruso, administrator of the U.S. Energy Information Administration, said the use of "conventional oil" will play a declining role in the overall importance of liquid fuels in the coming decades. Caruso said that overall liquid fuel use will increase 15% from 2006 to 2030, while crude oil production will decline 15%. This is because the use of non-conventional fuel will increase, he said.
"The share of oil, and especially conventional oil, in the overall liquids mix, is also expected to decline," said Caruso, in a prepared statement.
Caruso presented two projections about future oil prices. In his best-case scenario, oil declines to $57 per barrel by 2016 "as expanded investment in exploration and development brings new supplies to the world market." Then, he projects that oil prices will rise to $113 per barrel "as demand continues to grow and higher-cost supplies are brought to market."
In Caruso's worst-case scenario, prices fall to $79 per barrel in 2010 and then rise to $90 by 2015 and to $119 by 2030.
"The high price case assumes more limitations on access to resources and high development costs in non-OPEC regions," said Caruso, assuming that OPEC does not increase or decrease production.
Markey, the committee chairman, attacked the EIA projection of declining oil prices as inaccurate, particularly in the best-case scenario.
"Your projection is way off," said Markey. "I don't think it's even remotely close to where the price of oil is going to be."
Markey pressed Caruso to choose one of his projections - the high or the low - as the most accurate.
"If you ask me today what I would use, I would use the higher price," said Caruso.
Sieminski of Deutsche Bank, when pressed to choose one of the EIA scenarios as the most accurate, replied: "My experience with forecasting is that it hasn't worked out all that well. I would use a range. [But] if I were making this as a policy decision, I would plan for the worse."
Forecasters, and Americans in general, got a shock on June 6 when oil prices surged $11.75 a barrel on June 6 to a record high of $138.54. The nationwide average prices for unleaded gas hit a record of $4.052 on Wednesday.
Participants of the hearing also exchanged barbs about whether drilling should be expanded into untapped and restricted areas, such as the Arctic Refuge in Alaska. Proponents of drilling said that Americans should use domestic supplies to reduce dependency on foreign sources, like the Middle East. Opponents of drilling in environmentally protected areas said the production levels there would be too low to have a significant and lasting impact on oil prices. 
