IEA ON OIL: YIKES!
Peak oil fanatics are now officially peak oil theorists. The world is about to go through the looking glass.
Fatih Birol, Chief Economist, IEA: "We are entering a new world energy order…The oil investments required may be much, much higher than what people assume…"
Analyses of world oil have always focused on demand. The assumption was that supply would emerge to meet demand. OPEC has for decades assured the world it has the oil to do so.
The IEA has been the authority that kept things honest between OPEC and the world. The IEA is now reporting what OPEC does not want the world to know: Present known oil supplies may not be capable of meeting the growing world oil demand.
Demand is expected to climb from the present 87 million barrels/day to 116 million barrels/day by 2030. While OPEC has repeatedly asserted it will eventually be able to produce this much oil, preliminary IEA indications (foreshadowing an official November report) are that supply cannot get beyond 100 million barrels/day without significantly more investment in exploration and production.
Along with the IEA finding comes a plethora of predictions that oil will top $200/barrel by late 2008 or 2009. The implications for the world’s economy are ponderous. Or, as IEA Chief Economist Fatih Biriol put it: "This is a dangerous situation…"
Which is exactly what peak oil fanatics – whoops, sorry, theorists – have been preaching - whoops, sorry, forecasting - for most of the last decade (and some longer than that).
Footnote: That IEA stipulation about the need for more investment in exploration and production is the oil world's way of looking at the challenge. An alternative view: There is an urgent need is for more investment in New Energy.
Oil market activity has traditionally been guided by demand... (click to enlarge)
Energy Agency Wary of Oil Supply
Angela Charlton, May 22, 2008 (AP via Time)
Energy Watchdog Warns of Oil-Production Crunch
Neil King Jr. and Peter Fritsch, May 22, 2008 (Wall Street Journal)
The International Energy Agency (IEA) (Fatih Birol, Chief Economist); Organization of Petroleum Exporting Countries (OPEC); The Energy Information Administration (EIA) of the U.S. Department of Energy (DOE)
...But the IEA is now studying supply. (click to enlarge)
Preliminary IEA findings suggest world oil supply will in the near future fall short of world oil demand.
The official IEA report is due in November. It will describe world oil supply and demand factors through 2030.
click here for "The Oil Drum" and the best peak oil information on the web.
- The IEA is based in Paris.
- Past/present oil demand: Driven by U.S. and Europe.
- Present/future oil demand: Driven by China, India and the Middle East.
- Oil trading price, May 28 : $/barrel.
- The IEA is an agency of the Organization for Economic Cooperation and Development (OECD), a group of 30 industrial nations (Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States) based in Paris.
- The Energy Information Administration, the U.S. Department of Energy’s statistical agency, has this year begun its first analysis of oil supply.
click to enlarge
- Fatih Birol, Chief Economist, IEA: "The prices are very high, and demand did not respond in the last few years as much as one would have expected…The growth in terms of production was not great. We did not see enough investment."
- Guy Caruso, administrator, EIA: "We are optimistic in terms of resource availability, but wary about whether the investments get made in the right places and at a pace that will bring on supply to meet demand…"