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Peak oil – oil prices need to double in a decade

Suggested by EB contributor Ian McPherson, who writes on his blog:

Michael Kumhof explains the International Monetary Fund (IMF) Research Department’s new, strikingly more accurate, oil supply/price/demand prediction model, and says that according to the model oil prices will need to double in a decade to grow world oil production by 0.9%, in line with published EIA predictions*.

The world economy could not cope with a doubling of oil prices, which begs the question of whether world oil production can be increased at all, at a price that anyone can afford.

Kumhof is very careful to stress the uncertainties surrounding the IMF’s predictions (see Working Paper below), but brings the world a message that any reasonable growth in world oil production will be accompanied by serious episodes of demand destruction.

Video from the Institute of International & European Affairs:
Download the IMF Working Paper from here.

* It should also be noted that the Working Paper does not represent the views of the IMF. This is normal with IMF Working Papers.

A PDF of Michael Kumhof's slides is online at the IIEA website.
Editorial Notes: Note that the talk was given April 16, 2012. More on peak oil from the IIEA. -BA

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