HOUSTON (Dow Jones)--Executive Director of the International Energy Agency, Nobuo Tanaka, said Tuesday that the energy sector must, and governments must, invest to ensure future energy supplies and control emissions.
Tanaka told attendees at a Cambridge Energy Research Associates Conference that despite the financial crisis the energy sector needs to look to the medium- and long-term.
"The recent global events may be overshadowing our focus on the longer term concern about ensuring investment for safe, secure and sustainable energy supplies," Tanaka said.
Energy prices have plunged from recent highs. The price of oil has fallen about 70% since hitting a summer time high above $145 a barrel, and natural gas prices have lost about 65% of their value since peaking at $13.694 a million British thermal units.
But Tanaka said that cuts by the Organization of Petroleum Exporting Countries and colder winter weather has put a floor under energy and natural gas prices. However those low prices are discouraging investment and energy companies are finding it more difficult to raise money for existing or new projects, Tanaka said.
Still, Tanaka maintains that the slew of economic stimulus packages designed to shore up economic growth create opportunities for governments to address energy policy.
He said that energy investment strategies must be at the "heart of every energy stimulus package." He termed the initiative a "Clean Energy New Deal."
Tanaka said that renewable energy projects are much more capital intensive and less able to compete in a low energy price environment.
"Government intervention may be needed at this to address such financial constraints," Tanaka said.
But traditional energy supplies of both oil and natural gas should also be pursued to avoid diminished production and to make up for declines in existing oil and gas fields.
"There is a danger that investment in the coming months and years is reduced too much, leading to a shortage of capacity and another spike in prices several years later when the economy is on the road to recovery," Tanaka said.