The Organisation of Petroleum Exporting Countries meets tomorrow in Vienna to discuss global oil supplies. The question is what, in practice, can the cartel do to regulate the cost of crude?

The 11-member group will be mindful that oil prices surged by $2 a barrel in New York yesterday to close at $55.62 amid fresh supply worries. In recent weeks, the market has been hit by fears of a shortage of heating oil during the next northern hemisphere winter.

Beyond that, the organisation will also be aware of longer-term forecasts suggesting the issue of high oil prices is likely to remain contentious for the foreseeable future. To take one striking example, earlier this year Goldman Sachs, the investment bank, warned that the market could be brewing a "super spike", which would propel the cost of a barrel of crude beyond $100 on the back of strong demand and unrest in producing countries.

Since then, there has been precious little to reign in the bulls. Weekly inventory reports from the United States send ripples through the market, but broad appraisals of the world's energy supplies agree that oil prices are likely to remain buoyant - even if they do not test three figures. Senior Shell executives said last week that they expect oil prices to remain above $40 a barrel for the next 20 years. Just about the most bearish comments of late have come from Lord Browne, the chif executive of BP, who told a House of Lords debate last week he expects world oil prices to remain above $40 a barrel until new supplies come on-stream in three to four years.

Meanwhile, the world's cars and factories remain thirsty. Last week, the International Energy Association said in its June Oil Market Report that, "Demand growth continues to slow in China and Europe, but this is counterbalanced by relative strength in North America and the OECD Pacific." There are few signs so far that high oil prices are will dampen overall demand significantly and the IEA said that projected growth in world demand in 2005 remains broadly unchanged at around 2.2 per cent.

Against this backdrop, Opec is dangling the prospect of a 500,000 barrel a day increase to its daily output. That would represent a 2 per cent rise, to 28 million barrels a day. However, analysts are voicing concerns that Opec may be ill-positioned to enforce the hike. Those fears are being seconded by Opec itself.

The group's president, Sheikh Ahmad al-Fahd al-Sabah, has admitted such an increase would be little more than a "symbolic" gesture.

The arguments backing this up are well practised. There are doubts over whether Opec has the capacity to pump more oil. If it does hike output, the result is likely to be an influx of sulphur-heavy "sour" crude from Saudi Arabia, which is unsuitable for refining into lighter products such as petrol. Analysts also point out that oil producers are breaking their quotas anyway, in order to benefit from the present high prices, and that the market is being distorted by speculative players aiming to make money by playing the peaks and troughs.

Others argue that crude supplies are not the problem, but rather a lack of refinery capacity, especially in America, where years of cheap oil led to chronic underinvestment in infrastructure. Saudi has made this point ahead of tomorrow's meeting. The country's oil minister, Ali al-Nuaimi, urged consumer countries to build more refineries amid warnings that Opec was effectively powerless to stem high oil prices or counteract shortages of refined products.

"The supply is here, inventories are building, there is certainly no shortage of supply - so build, build refineries," he said.

The call for action by oil importers is apposite and important to Opec as well as the West. It is not just a question of building new plants to process oil. Alternative energy sources are high on the agenda and most western governments are aware they have to act. If governments want to see, for example, electric-hybrid cars and buses, they will have to begin planning now for implementation in 30 years' time.

And for all the characterisations of oil producing nations making hay and basking in the sun of $50 barrels of oil, Opec professes to realise that if high oil prices were to derail the global economy or prompt a mass move to alternative sources of energy, they would also suffer.

"We should be the last people to gloat because if we look at the long term, we have to worry about alternatives," Edmund Daukoru, Nigeria’s presidential adviser on energy, told Reuters. "We worry about what it will do to the global economy. We worry about competing energy sources."

Given the outlook on oil prices and the likely muted impact of tomorrow's Opec meeting, the world should hope Mr Daukoru and his peers are given cause for concern.

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