The pressure to keep up with the U.S. appetite for oil is never-ending, but most E&P companies refuse to stop trying. The hunt for more oil resources is in full swing, but is it already too late? Some energy analysts say the nation is in a deep energy hole that is dangerously approaching collapse. Matthew Simmons, chairman of Simmons & Co. International, and Ann-Louise Hittle, head of macro-energy for Wood Mackenzie, say the U.S. had an energy-supply wakeup call in 2004, and they hope the industry was paying attention. "Several pressures on the industry have resulted in our position today," Hittle told an audience at the IPAA annual meeting in Houston. "Demand growth, years of weak margins slowing refinery investments, lack of supply data in key areas, rising costs, resource restraints, limited access to resource-rich areas and reliance on Saudi Arabia for spare capacity are prominent." Simmons said, "America and the world were drafted into a benign energy war. Demand was supposed to peak, oil supplies were supposed to grow and stay cheap, and costs were supposed to fall. Instead demand grew too fast and never peaked, costs doubled, new supplies got smaller, proven reserves got harder to nail down and energy-reserve cushions were viewed as glut." All of this was a dream and "the alarm clock is ringing." He added, "The real demand story is that it grew by 15 million barrels per day in the past decade, the fourth-quarter non-OPEC supply surge went AWOL and too many countries peaked." Despite this scenario, Simmons said believers still think demand growth is slowing and technology is converting nonconventional oil fairly fast. He added that a number of industry leaders still say supply is no problem, and he quoted the incoming chief executive of ExxonMobil as having said we still have 3 trillion barrels of useable oil left. "We now have three types of oil and gas reserves," Simmons said. "The proven conventional, the proven unconventional and the 'conceptual' reserves-they're not found yet but we're sure they're there. There are way too many long-term [supply] models banking on conceptual reserves." For more on this, see the December issue of Oil and Gas Investor. For a subscription, call 713-993-9320,ext. 126.