Editor’s Note: Meeting the Challenge is an open-ended series from EnergytechStocks.com intended to build a blueprint for how the world can meet the incredible increase in all forms of energy that will be needed by 2030 without endangering the environment or nations’ security. In the coming weeks and months, recognized experts will share their ideas, and important new investment themes (including some that could turn out to be worth many billions of dollars) should emerge.

Posted: September 7, 2007

For John Felmy, chief economist at the American Petroleum Institute, the challenge of meeting the world’s need for more energy requires a concerted diplomatic effort. If Felmy were a diplomat, probably the first place he would visit is Mexico City.

Like other energy experts, Felmy is worried about the precipitous decline in production from Mexico’s giant Cantarell oilfield. Cantarell reportedly is the world’s second biggest oil complex. It is the backbone of Mexican oil production, which provides a virtually irreplaceable source of imported crude for the United States. As Cantarell falters, Felmy sees a critical need to convince Mexico that it needs to change.

Felmy says Mexico needs to bring in outside experts that can help shore up its oil industry. The country also must move beyond oil as the basis for its economy. Unfortunately, Felmy doesn’t expect any significant change until Mexico’s own citizens aren’t getting oil.

That, of course, could mean that U.S. citizens aren’t getting oil either. According to Felmy, “We don’t have a big cushion” of other oil sources to turn to in the event Mexican exports plunge, which they are expected to do.

While Mexico City would likely be his first diplomatic destination, Felmy sees diplomacy being very important as Russia, the U.S., Canada and other nations start to jockey over control of vast amounts of oil and natural gas waiting to be extracted from areas north of the Arctic Circle. All three nations, plus Norway, are trying to stake claims to a region that by some estimates could contain at least 70 billion barrels of oil.

Not surprisingly, Felmy also sees diplomacy being important in the Middle East, although he adds that he has no idea when diplomacy might become possible in war-torn and oil-rich Iraq.

Part 3 of Felmy Series Will Run Tuesday, September 11