(MENAFN - Arab News) The recent attack on the Algerian gas plant has highlighted one major issue facing the oil industry in years to come: Uncertainty. And that uncertainty will have its impact on both supplies and prices.
The surprise in that attack rests not on the fact it happened, but on why it did not happen before given the fact that Algeria has been going through a bitter decade of civil war between extremists and various Algerian governments backed by the army.
As a former British diplomat to Algeria explained the reason could be attributed to the conviction of the Islamists groups that they wanted to keep these installations safe and operating hoping to use them one day when they got hold of power.
However, there is now an added factor of uncertainty of security dimension that has been there on the horizon as in the background given a foiled attack on the Kingdom's Abqaiq's facility some years ago.
Though that attacked was stopped even before it reached the gates, but oil prices then have added 2 a barrel immediately on the news of the attack, which shows how sensitive is the whole issue.
Last month also saw the International Energy Agency (IEA) issuing its usual monthly report that coincided more or less with the Algerian attack.
The IEA report expects an increase of 240, 000 barrels per day (bpd) in world oil demand to 90.8 million bpd.
Thanks to China, which is expected to be the main source for that demand growth.
In fact, China has been consuming two thirds of demand growth in the four years up to 2011.
Though the market remained well supplied but price volatility remains a real possibility as has been the case between 2005-2011, thus contributing to a level of uncertainty that been engulfing the market somehow.
Though the market seems to be balanced at present, there are some question marks about the future.
There is always a possibility of price swing either way.
Looking long in the future the Organization of Petroleum Exporting Countries (OPEC) issued last November its forecast up to year 2035.
It concluded that fossil fuels that currently stood at 87 percent of the energy mix will drop slightly to 82 percent. Of that, oil share is expected to decline from 35 percent to 27 percent by 2035. In absolute figures, oil demand will increase by 20 million bpd to 107 million bpd.
It is not an issue of availability of the hydrocarbon resources, but more important is the issue of deliverability, which implies investments in new projects to ensure providing the needed supplies.
Such investments rely to a large extent on oil revenues that depend on prices as well, but price will depend to a large extent on whether the market will continue to be balanced or that supply will outstrip demand, in addition to the state of inventories in the main consumer countries and the volume of spare capacity in OPEC as the residual supplier.
However, issues such the economic recovery and geopolitics will continue to have an impact on prices, starting with what happened in Algeria.
However, the responsibility of ensuring supplies does not rest on producers only; consumers share that responsibility as well.
On one hand they need to contribute somehow.
Taxes imposed by some industrialized countries on oil demonstrate clearly that point.
In the words of Abdalla El-Badri, OPEC secretary general, while the organization member countries earned a total of 4.2 trillion between 2007-2011, OECD countries levied 5.5 trillion in terms of taxes on oil.
In other words some industrialized consumer countries have gained out of oil taxes more than what have been earned by producers themselves.
That tax issue has been on the agenda of discussion for quite some time to no avail.
For a variety of political, environmental and other reasons, oil has been demonized and imposed tax is a price paid because of that.
Still the main issue continues to be a fair price that can help producers meet their spending needs and at the same time be able to devote some of that income for new project investments or to expand existing ones to ensure meeting market needs.
A fair price that satisfies all these needs is part of the elusive market stability target that has been pursued over the years with no much success.
The increased terrorist threat on oil and gas installation adds to that uncertainty, and in a relatively tight market any attack on oil or gas installation is considered a potential threat that may affect supplies.
And this requires a more political will from both producers and consumers to be exerted to face up to new and added challenges that will impact the market for times to come.