With markets in doldrums and oil prices oscillating in the mid-$30s, a consensus to develop an all inclusive energy strategy seems emerging. And it is not just coming from Saudi Arabia and fellow OPEC producers; pundits intricately involved with the industry also seem to be conceding.

At the 28th annual conference CERAWeek — almost an annual pilgrimage to the energy fraternity — the same sentiments kept echoing not only in the meeting halls but also in the corridors surrounding them.

“The recession shock has hit all of the energy industry hard, and indeed has taken it by surprise,” admitted Daniel Yergin, the author of “The Prize: The Epic Quest for Oil, Money and Power” and the CERA founder and conference chairman.

For two days attendees remained feverishly engaged, addressing the forum’s theme, entitled “Risk and Rebuilding Confidence: Energy Strategies for a Turbulent Economy.”

Industry veteran Oil Minister Ali Al-Naimi vehemently underlined the “nightmare scenario” if consumers seek to speed up the development of alternative fuels.

“If today’s low prices continue long enough, they will sow the seeds for future price spikes and volatility,” Al-Naimi said in Houston recently. “From a fundamental viewpoint, prices will be just as unsustainable at these low levels as they were at the stratospherically high levels experienced last year.”

The minister called alternative fuels important and said Saudi Arabia would like to become the largest exporter of solar-generated electricity. Still, he reminded the august audience that fossil fuels would be the dominant energy for 30 to 50 years.

The push for alternative energy definitely carries risks causing an energy shortage if oil companies cut production and alternative energy producers cannot make up the difference.

“We must also be mindful that efforts to rapidly promote alternatives could have a chilling effect on investment in the oil sector,” he said.

And the world cannot afford this cool down.

Saudi Arabia has a goal of keeping spare production capacity at 1.5 million to 2 million barrels of oil per day to help stabilize prices, Al-Naimi said. That cushion is expected to swell to 4.5 million by mid-year when the 1.2 billion barrel-a-day project in Khurais comes online.

The Saudi energy minister’s comments captured the common theme at the conference that the energy markets are in limbo. Oil and natural gas demand may be down worldwide, with prices languishing now at 2004 levels, yet it’s not a time to get complacent about investment or an economic recovery, BP Chief Executive Tony Hayward told energy executives at the most profiled industry event.

“I believe this is a crucial moment,” he told the meeting where the global recession and a fall in prices from last year’s unprecedented highs have dominated speeches, panel discussions and hallway conversations.

Jeroen Van der Veer, CEO of Royal Dutch Shell, offered a similar view. He said the downturn is temporary, while global energy needs will continue growing in the long term and continued investment is critical.

“Energy demand will double between now and 2050,” Van der Veer said in a luncheon speech. “People like to have electricity, and they like to drive in cars.”

Van der Veer underlined a protracted recession could bring huge cuts in investments that would harm producers and consumers.

Even the Paris-based IEA while pointing out that the demand is falling rapidly, lowered its demand forecast for 2009 by 980,000 barrels per day (bpd) as compared to the previous projection for a 500,000 bpd contraction. However, IEA continues to underline the world will need 40 percent more energy in 2030 than it consumes today, the recession notwithstanding. And most of it would still come from fossil fuel. And the double talk of reducing dependence on Middle East oil makes the entire situation still hazier and more dangerous, every one concedes.

And within OPEC too, 35 incremental projects are currently on hold.

“These projects are on hold ... and will continue to be until the (oil) price recovers,” OPEC Secretary General Salem El-Badri told journalists. And as a result of the project delays, OPEC will not be able to increase production capacity by all of the five million barrels a day by 2012 that was previously expected, said El-Badri.

El-Badri’s comments came after United Arab Emirates Oil Minister Mohammad Al-Hamli warned that weak oil prices and economic recession are threatening longer-term spending on Middle East oil projects.

In the rush to undermine this oil rich region, and in the race to somehow break the addiction to “Arab oil,” one shouldn’t undermine the future of this energy-driven civilization. After all, fossil fuel would still be needed in abundant quantities many decades down the line and an all inclusive strategy to meet the energy challenges of the future is an absolutely essential. Who knows many, many decades down the line, despite all the drive to get rid of the Arab oil, the world remains dependent on the solar power that Saudi Arabia is endeavoring to build. Somehow it seems the world was designed this way — dependent and not independent of each other.