Daniel Yergin

But eventually it's a question of access: Getting access to fields is on top of the oil companies' agenda. We see a substantial build-up of supply occurring over the coming years.

Cycles of shortage and surplus characterize the entire history of oil.

Even Silicon Valley investors have put well over a $1 billion in new energy technologies.

First, we have to find a common vocabulary for energy security. This notion has a radically different meaning for different people. For Americans it is a geopolitical question. For the Europeans right now it is very much focused on the dependence on imported natural gas.

The North Sea was supposed to run out in the 1980s. Then in the 1990s. And now production is still on-line.

It's extraordinary how inventive one can be with ethanol right now.

People always underestimate the impact of technology. To give you an example: In the 1970s the frontier for offshore development was 200 meters, today it is 4,000 meters.

So the major obstacle to the development of new supplies is not geology but what happens above ground: international affairs, politics, investment and technology.

We are living in a different world now. You can see it everywhere in international relations: It was noteworthy that, after his visit to Washington, the Chinese president's next stop was Saudi Arabia.

We experienced similar fears in the 1880s, at the end of World War I and II. And we ran out in the 1970s.

I think the producers, for the most part, don't want to see prices skyrocket because that will only create problems for them down the road and would also be a, you know, would be a very serious shock for a world economy that can't afford serious shocks right now.

If a war started, the oil price probably would go up, as you said, maybe $5, $6 a barrel until you saw other oil from the extra supplies that are available elsewhere coming into the world, into the market.

The other are the strategic, so-called strategic stocks that the United States and the other Western industrial countries have, which could put in as much as four million barrels a day of oil into the market pretty quickly.

The bulk of extra supplies that could be put into the market come from two places. One, they come from other Persian Gulf suppliers, of which Saudi Arabia is at the top of the list.

But the key thing is that Iraq, while it's got very large oil reserves, has marginalized itself as an oil exporter and these days its exports are only about one tenth that of neighboring Saudi Arabia.

But that's not enough: To maintain energy security, one needs a supply system that provides a buffer against shocks. It needs large, flexible markets. And it's important to acknowledge the fact that the entire energy supply chain needs to be protected.

Clearly, the Chinese need the resources, but I don't think they want to clash with the industrial world which happens to be the market for their goods.

This has a lot to do with the unrest in Nigeria, but also with the production loss after the hurricanes in the Gulf of Mexico, the decline in Iraq since the 2003 war, and the decline in Venezuelan output since 2002.

In a couple of years, the Chinese will be seen as regular participants in international industry. Their companies have to report to shareholders as well as to the Chinese authorities. They need to make money, they have to be efficient.

A premium in the oil price of somewhere between 10 to 15 dollars a barrel reflects this heightened anxiety.