IEA Expects to Reduce Long-Term Oil Supply Outlook

May 22, 2008 04:23 PM
by Cara McDonough
The top energy watchdog group is undertaking its first thorough assessment of the world’s top 400 oil fields and anticipates future oil supplies may be lower than expected.

30-Second Summary

The report of the Paris-based International Energy Agency will not be released until November, “but the bottom line is already clear: Future crude supplies could be far tighter than previously thought,” reports The Wall Street Journal.

Previously the agency has predicted that crude supplies will arc to keep pace with rising demand, topping 116 million barrels a day by 2030. But now the group worries that aging oil fields and diminished investment may leave oil companies struggling to produce even 100 million barrels a day for the next two decades.

The news comes as oil prices soar continually higher. The IEA’s pessimistic prediction could make matters worse.

Crude oil reached a new record high this week, rising above $135 a barrel. Prices have risen 18 percent this month and banks have increased price forecasts due to limited supply and demand growth, Bloomberg reports.

IEA findings won’t be definitive, because big producers including Venezuela, Iran and China are not cooperating, and others such as Saudi Arabia typically treat oil data as closely guarded state secrets. To compensate, the IEA is using computer models to make estimates.

However, the decision to survey oil supplies reflects a growing fear that oil-rich regions are not producing enough to meet future needs. “Peak oil” theorists, who believe that oil is a finite resource and is running out, have been pushing the idea for years.

“The oil investments required may be much, much higher than what people assume,” said Fatih Birol, the IEA’s chief economist and the leader of the study. “This is a dangerous situation.”

Headline Link: ‘Energy Watchdog Warns Of Oil-Production Crunch’

Background: Gas prices and the Strategic Petroleum Reserve

Opinion & Analysis: Peak oil, long-term solutions

Reference: The International Energy Agency, oil consumption and ways to conserve


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