IEA Chief Economist: Oil supplies are running out fast

[muriel_volestrangler]

Higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course, said Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, which is charged with the task of assessing future energy supplies by OECD countries.

In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated.

But the first detailed assessment of more than 800 oil fields in the world, covering three quarters of global reserves, has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago. On top of this, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an "oil crunch" within the next five years which will jeopardise any hope of a recovery from the present global economic recession, he said.

In a stark warning to Britain and the other Western powers, Dr Birol said that the market power of the very few oil-producing countries that hold substantial reserves of oil – mostly in the Middle East – would increase rapidly as the oil crisis begins to grip after 2010.
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http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html

[Terry in Austin]

1. Shh -- we don't mention this in public.

Actually, it's good that the peak oil story is starting to "leak." Not that that will lessen the strident denials any time soon.

Good piece, although Birol tends to overstate estimates of when the peak is supposed to occur. He puts it at a diplomatic 10 years, possibly to soften a hard story that nevertheless still needs to be told.

The fact is, world production has been on the flat plateau at the top of the curve since mid-2004, with the highest point so far occurring in mid-2008. It seems unlikely in the extreme that there will be production levels in 2019 that match those of 2008.

To give him credit, though, the talk about "peak in 10 years" is a bit of a misdirection. Further down, they get to the real peak oil story, which is the point where supply starts chronically falling short of demand:

The International Energy Agency believes peak oil will come perhaps by 2020. But it also believes that we are heading for an even earlier "oil crunch" because demand after 2010 is likely to exceed dwindling supplies.

So they are able to substitute the phrase "oil crunch" for the much scarier "peak oil," which may help get the story out there more.