Gulf oil producers say "no excess capacity"

LONDON, England (CNN) -- Keeping up with the world's oil demands is a full-time job.

Off the Arabian Peninsula oil rigs pump night and day, 365 days a year to produce just part of the two and a half million barrels of oil that come out of the United Arab Emirates.

Demand keeps on rising but from Abu Dhabi to Qatar most of the Gulf's oil producers say they can't increase production any more.

"Actually there isn't the capacity today. It will take three to five years to bring on excess capacity. And even with that excess capacity that is being planned the local demand is increasing so quickly that there is really question how much will be available to the global market," Peter Barker-Homek, CEO of Abu Dhabi National Energy told CNN.

It is an opinion echoed by many business and political leaders around the region, including the Prime Minister of Qatar, Hamad bin Jassem Al Thani.

"In my opinion everyone is at full speed, enjoying high prices, but there is no excess capacity immediately," he said.

The six nations of the Gulf are enjoying the fruits of record petroleum prices.

Last year, they collectively made $380 billion, but the unprecedented windfall wasn't expected.

Today's high prices, which have led to rising costs at the pump, are the result of a huge miscalculation. Industry planners simply underestimated the world's growing appetite for oil.

A decade ago demand was running at 74 million barrels a day. Today, even with an economic slowdown in the U.S. and Europe, global demand is estimated to hit a record 87 million barrels a day.

It continues to surge because of rapidly developing countries like China and India, not to mention the requirements of the Gulf states' booming. By 2030, world demand is expected to reach 115 million barrels a day.

"The developed world has got to realize that they are in a bit of a "has been" status and that these other people have demands of their own -- and growing -- and that there has to be a bit of a balance," said Martin Lovegrove, an oil and gas expert at Standard Chartered.

The new economic reality has not stopped U.S. President George W. Bush from asking old allies like Saudi Arabia to produce more oil to ease the pressure on Americans.

"My advice to OPEC, and of course they haven't listened to it, but my advice to OPEC is to understand that this is affecting our American citizens," Bush told reporters at a press conference outside the White House after talks with King Abdullah II of Jordan.

But even Bush's closest allies have publicly acknowledged that upping production may not be possible.

In March this year, U.S. Vice President Dick Cheney visited Iraq during a trip to the Middle East.

"There is just not a lot out there, and some of that excess capacity represents high sulfur crude, for example. It's not very attractive and not easily marketed. You've also got a situation where you have a dramatic increase in demand. Not just in the developed world, but in the developing world," said Cheney of the oil capacity situation, at a press conference in Baghdad.

The 13 members of OPEC are spending an estimated $150 billion to increase production over the next five years -- with a third of that taking place in Saudi Arabia.

"The excess capacity that you can see today exists in Saudi Arabia. There is capacity that will come on in Iraq as soon as Iraq stabilizes. And there is capacity that could come on from Iran if relations warm with that nation," Peter Barker-Homek, CEO of investment company, Abu Dhabi National Energy.

But they don't present near-term solutions to today's price and supply challenges.

Production has dropped by 25 to 40 percent in big non-OPEC producers like Britain, Norway and Mexico over the past eight years.

All this means Gulf oil producers -- especially Saudi Arabia -- will be in control of the vast majority of the world's output for years to come.

What's more, they are in no particular rush to get more oil to market.