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IEA Expects to Reduce Long-Term Oil Supply Outlook
May 22, 2008 04:23 PM
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.
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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.”
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’
The IEA’s prediction is “very important, because the IEA is treated as the world’s only serious independent guardian of energy data and forecasts,” says Edward Morse, chief energy economist at global investment bank Lehman Brothers.
Source: The Wall Street Journal (subscription may be required)
Background: Gas prices and the Strategic Petroleum Reserve
U.S. gas prices have been breaking records consistently this year, and some experts believe oil prices will continue to rise significantly, even reaching $200 a barrel in the future.
Source: findingDulcinea
Seven weeks ago major oil company executives spoke to congress when oil was about $100 a barrel. Now it is over $130. Members of the Senate Judiciary Committee on Wednesday talked to the oil executives about why prices are so high.
Source: NPR
Due to rising oil prices, the U.S. Department of Energy announced week that shipments of oil to the Strategic Petroleum Reserve have been cancelled for a six-month period starting July 1. The Strategic Petroleum Reserve is a system of underground salt domes on the coast of the Gulf of Mexico, created in the 1970s as a precaution against major interruptions of oil supplies. President Bush has been steadfast in continuing shipments of oil to the reserve until it reaches its capacity of 727 million barrels and opposed halting shipments.
Source: findingDulcinea
Opinion & Analysis: Peak oil, long-term solutions
The peak oil blog Life After the Oil Crash begins with the dire warning, “civilization as we know it is coming to an end soon.” Blogger Matt Savinar says this is not a conspiracy theory or biblical tale of apocalypse, but a factual report derived from data from geologists and physicists. “The issue is not one of ‘running out’ so much as it is not having enough to keep our economy running,” Savinar writes.
Source: Life After the Oil Crash
Forecasts of ultrahigh oil prices may come true, according to a Financial Times editorial, “because in the short term there is little scope either to reduce demand or to increase supply,” so it won’t take much to drive prices up. But the long-term oil problem is more important, according to the piece: “The question is whether prices will eventually fall because of a substantial expansion of oil supply, a switch to alternative fuels, or a collapse in energy demand.”
Source: Financial Times (free registration may be required)
Reference: The International Energy Agency, oil consumption and ways to conserve
The IEA, founded in the 1970s, acts as an energy policy advisor to 27 member countries in an effort to ensure reliable, affordable and clean energy for their citizens, according to the group’s Web site.
Source: International Energy Agency
According to an Energy Information Administration prediction, world consumption of petroleum and other liquid fuels will grow from 83 million barrels of oil equivalent per day in 2004 to 97 million in 2015 and 118 million in 2030.
Source: Energy Information Administration
Many experts believe that the supply of oil, America’s primary source of energy, is leveling off and may soon begin to drop permanently. Americans must begin to conserve now to avert a drastic shortfall. FindingDulcinea suggests 10 practical ways to do so.
Source: findingDulcinea
© 2009 Dulcinea Media, Inc.
