The annual CERAWeek by S&P Global energy conference in Houston, which wrapped up Friday, could not have come at a better — or more fraught — time.

Energy executives, policymakers and thousands of others gathered in Texas this week as Russia’s invasion of Ukraine has thrust energy — prices, security, the transition to renewables — into the headlines, alongside the tales of human suffering.

Jennifer Granholm, Energy Secretary, was the keynote speaker. She surprised everyone with her strong plea to increase oil production. Over hundreds of sessions, as well as between each session within the conference halls, experts discussed what next and how the global energy industry should evolve. Do the U.S. need to continue drilling for oil and natural gas? Energy security means developing renewable energy and moving away form dependence on petroleum products. Is natural gas the new bridge fuel? Which role should investors play in producing policies?

The conference was attended by many people in the oil-and gas industry. There was optimism about the essential services provided by their companies. In conversations with more then a dozen people who spoke anonymously about their companies, there were divergent opinions over issues such as the impact of spiking oil and natural gas prices on the energy transition. One thing that was common was the belief that traditional energy companies should be included in this conversation.

“I actually feel very proud to work for an oil and gas company … we’re providing energy for the people,” said one conference attendee. One conference attendee stated that there has been “a lot of an attack against the oil and gas sector,” before adding that energy integration has become a focal point in the current conflict. There will be an energy mix. “We’ll still need fossil fuels. Then we need to transition to renewable energy. But it needs to be a slow process,” said the individual.

“I’m very happy to work in oil and gas … it is an industry of technology [and]One attendee said that innovation is the key word. Another participant said that “I think our sector is leading the charge” and added that natural gas infrastructure “can contribute to ambitious environment goals, including net-zero, decarbonization, as well as other environmental objectives.”

At this point no one doubts, even in the oil and gas industry, that the energy transition is coming — it is, after all, unfolding before our eyes. There are many opinions on the pace at which it will happen. The estimates of when peak oil demand are all different. CERAWeek was a showcase of decarbonization technology demonstrations by oil and gas companies, including carbon capture and hydrogen. These companies include Exxon, OxyPetronas, Saudi Aramco, and Petronas displayed their accomplishments on these fronts with sleek displays.

One person said, “It is pretty exciting.” There’s much happening to transform and grow this industry from the status quo.

In the near term however, crude oil demand will rise to a record high of 100 million barrels per hour this year. The question of whether, and when, oil producers increase output has been front-and-center with rising prices.

One participant said that the initiative will help the oil and gas industry accelerate energy transition. However, in the immediate term, he believes we’ll see more oil because the world has a pressing need for it.”

The ability of Russia to make a significant impact on global energy trade through its control of so much oil production and the fact that the market is interconnected and highly interlocked was top of mind.

Even before the Ukrainian crisisOil prices have been steadily rising from the unprecedented lows reached during the pandemic. It was the U.S. oil benchmarkThe virus slowed demand for petroleum products and even caused trading to be suspended temporarily.

Since then, demand has recovered while supplies have remained limited, driving prices up. After Russia invaded Ukraine on April 1, the U.S., global and local oil benchmarks leapt above $100. They reached $130 just a few weeks later. Brent crudeOil price index – the global oil indicator – was close to reaching $140 Russia is estimated to produce about 10,000,000 barrels of oil each day. About half of this country exports. Russia is an important supplier to Europe and prices rose because of fears about production losses in a tight market.

President Joe BidenSince then, banned energy imports from RussiaEven though the U.S. does not import much Russian goods, it is a significant step. This would make it even more important if Europe imposed similar restrictions. Even though sanctions were not announced against the energy industry, Russian goods were being avoided by buyers who feared they might be discovered violating the bans.

U.S. producers may have once been eager to get the faucets open as commodities rose in price from $50 to $60, $75 and $90 to above $100. However, companies that emerged from this pandemic have a completely different outlook. It’s no longer all about growth — a point that was underscored again and again in Houston. These companies are now focusing more on capital discipline as well as shareholder returns via buybacks or dividends. Once boatloads of cash are being returned to investors, it’s not easy to go back to those very same investors – some of whom weathered years of poor returns – and say it’s time to start drilling again.

This doesn’t necessarily mean production hasn’t been increasing. According to oilfield services data, Friday’s oil and gas production rose for the 9th time in 10 weeks. Baker Hughes. Number of oil rigs is now at 527. This number has been the highest level since April 2020. However, this number remains below 700 pre-pandemic levels.

High fuel prices have undoubtedly been a drain on the oil industry. However, even the largest oil companies won’t like such high prices at some point. Washington will be focusing all of its attention on the oil industry. However, it could also lead to a recession.

One attendee from Houston, who is the deputy director for production in an integrated oil company, stated that if oil prices remain high, it would be a recession. Although estimates of where the next oil price will go vary, some think $200 could be in sight if Russia continues its war.

That’s bad for consumers. Another conference attendee noted that this is also bad for the industry. On Sunday, the national average price for a gallon was $4. Prices have increased further in the past week.

Climate change is a key principle of the Biden Administration. Oil and gas companies claim that policies are unfriendly to their business. Often, delays in granting permits are mentioned. These claims are refuted by White House officials who claim they have issued permits but that the industry hasn’t acted.

On Wednesday’s address by Jennifer Granholm, Energy Secretary to Houston, CERAWeek was greeted with a different tone from the Administration. She basically pleaded with companies to drillIn a speech which was frequently at odds with the Biden administration’s goals for decarbonization,

She appealed to investors in oil and gas. Before a packed room of executives in the energy industry, she stated that “I am sure your investors are speaking these words to me as well. In this moment of crisis,” they need more supply.

One person in the industry described the predicament that oil and gas companies find themselves in – beholden to shareholders even as officials ask companies to raise output – as a “self-inflicted wound.”

The person said that investors wanted capital discipline in oil and gas companies in America. “We have been giving back a lot to our shareholders as a result,” he added. This lowers oil companies’ desire to quickly increase production.

All other things being equal, even if oil and natural gas companies decide to raise their output tomorrow it will still take months for operations to start.

These things are very difficult to fix. There is no way. … Nothing will be immediate,” said one person.