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IEA says oil prices will stay ‘very high,’ threatening global growth
James Kanter, International Herald Tribune
The rapidly growing appetite for fossil fuels in China and India is likely to help keep oil prices high for the foreseeable future – threatening a global economic slowdown, a top energy expert said Wednesday.
The unusually stark warning by Fatih Birol, chief economist of the International Energy Agency, about the impact of Asia’s emerging giants comes as the agency prepares to issue its influential annual report next week, which will focus on China and India.
In preparing the report, Birol said he had experienced “an earthquake” in his thinking.
“China plus India are going to dominate growth in the oil markets,” Birol said during an interview at an oil industry conference. During the past 18 months, he noted, more than two-thirds of the growth in global oil demand came from China and India alone.
Demand for oil in China, he added, would eventually equal the entire supply from Saudi Arabia.
Partly as a result, he added, the annual report would predict that oil prices, now at about $93 a barrel, could remain at levels much higher than thought possible in the past. This, he said, heightened the risk of a serious global economic slowdown.
“We may see very high prices that will come to a level where the wheels may fall off,” Birol said. “I definitely believe that if prices stay at these levels, there will be a slowdown of the global economy.”
(31 October 2007)
The original article has a a video interview with Mr. Birol.
Also see today’s interview of Mr. Birol by Energy Bulletin contributor David Strahan: IEA reviews reliance on USGS resource estimates.
-BA
Homer-Dixon and peak oil at governance/energy conference
Jeff Sanford, Canadian Business Online
This past weekend a distinguished group of experts in governance and energy gathered in Waterloo, Ont., for the annual conference of the Centre for International Governance Innovation. The CIGI event took place in the gorgeously restored Seagram’s distillery, a Governor General’s Award-winning building in this southern Ontario university town. The lovely surroundings, however, belied the seriousness of the discussions within.
This year the centre dedicated its conference to discussing energy, which, as an issue, is rapidly moving up the list of priorities for decision-makers everywhere. The western world’s installed energy infrastructure is struggling to keep up with burgeoning global demand, and it’s not clear how we are going come up with the new generation. As one delegate put it, foreign policy is increasingly being conducted on the basis of energy needs, and talk at the conference was of the need for a “war-time” or a Manhattan-Project-like approach to restructuring the energy infrastructure of our western societies.
The conference’s first session saw a brief discussion of peak oil, the idea that we’re closing in on a peak in terms of liquid fossil fuels that can be produced on a ready basis. The idea we may be near peak was considered a subject for “kooks” not so long ago, but it’s being taken more seriously today, says Thomas Homer-Dixon, one of the panel’s participants.
Homer-Dixon, of course, is the author of The Upside of Down, which looks at the possible consequences of a one-time reversal in some of our traditional key energy trends. According to him, even Exxon-Mobil has now conceded peak oil and estimates that OECD countries are set to peak within 10 years. The consequence of that will be to put “the call” on OPEC to raise output to make up for any gaps. The cartel will be closely watched (and under heavy pressure, no doubt), but it’s also not clear that it will be able to step in with production increases necessary to continue to support the fossil fuel dependency of the last 50 years.
The dire consequence here is that if we do hit a peak and follow that up with serious production declines of, say, 8-12% a year, we will have to prepare ourselves for severe price shocks in the global economy.
(31 October 2007)
Report on London Oil & Money Conference
Finfacts
Oil industry experts predict supply crunch in coming years; Underinvestment, skill shortages and difficult-to-access reserves, likely to keep oil above $100 a barrel for sustained period
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As the price of a barrel of crude oil heads for the $100 threshold, and will soon exceed the real dollar all-time record value reached in 1980,* the annual Oil & Money Conference was told in London on Monday, that shortages of skilled labour and long-term under-investment mean oil supplies are unlikely to meet the expected growth in demand over the coming years.
(31 October 2007)
Summarizes the main points from some of the speakers at the confernce.
Peak oil: More than cars
David Roberts, David Roberts
Progressive pundits don’t seem to be fully grappling with the oil problem
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Earlier this week, Joe Romm said he doesn’t see peak oil radically changing U.S. culture, since hybrids and plug-in hybrids will reduce the fuel necessary to get around. Matt Yglesias, reacting to a recent Michael Klare piece, “Beyond the Age of Petroleum,” agrees with Joe, saying, “even current gasoline prices are actually quite low as a share of household income by historical standards so even if plug-in technology doesn’t materialize (which is hard to believe) we’re not on the precipice of such never-before-seen apocalypse.”
Atrios weighs in here and here (as do his commenters, with a cumulative 861 [!] comments), saying, “rising oil/gas prices, over time, might impact peoples’ behavior in terms of what kind of car they use and how much they use it. … But … it’s just hard to see how any realistic scenario leads to the kind of of economic and social Armageddon that some authors predict.”
The presumption shared by Joe, Matt, and Duncan — and even by John, in arguing against Matt — is that cars are the central issue here. Can drivers handle a hike in gas prices? Well, if that’s the question, then sure, they can — gas prices have risen sharply in the last couple years and the economy hasn’t so much as twitched. Gas prices will keep going up, but hybrids will increase in market share, plug-ins will come online, and all will be well, right?
Now, I’m no peak oil doomer (by the way, when you’re talking with peak oil types, be sure to use the word “doomer” frequently — they love it!), but it seems to me this is a slightly pinched perspective on the oil problem.
…Of course, there are a panoply of efficiency opportunities for every use of oil, not just personal vehicles. I don’t expect “economic and social Armageddon” — or more to the point, I don’t like to make predictions, since I, like everyone else, have about as much chance of being right as a dart thrown at a dartboard filled with predictions.
But simply waving your hands toward more fuel efficient cars hardly makes the oil supply problem go away.
(31 October 2007)
Also at Huffington Post.
Bart Anderson on the Reality Report
Jason Bradford, Global Public Media
Bart Anderson of Energy Bulletin recaps recent news related to resource depletion, climate change and more.
Jason Bradford hosts The Reality Report, broadcast on KZYX&Z in Mendocino County, CA.
(30 October 2007)
I hope to post a list of the stories we discussed. -BA
The Energy and Environment Round-Up: October 31st 2007
Stoneleigh, The Oil Drum:Canada
Tony Blair, visiting the Alberta oil patch, says that Canada is destined to become an economic and political powerhouse thanks to our energy reserves. Stephen Harper has said much the same – that we’re an energy superpower and therefore need not concern ourselves with potential shortages as other countries must. To this writer, such statements represent a staggering degree of hubris, and a fundamental lack of understanding of the nature of political power on the international stage.
This Round-Up covers the on-going Alberta royalty debate, which now appears to have BC thinking about increasing gas royalties as well, following a global trend. While BC contemplates carbon taxes, Jeff Rubin at CIBC steps into the ethanol debate and attention turns to nuclear waste disposal.
Fresh water is fast becoming a huge issue on the international stage – from falling water levels in the Great Lakes to drought in the US and Australia to the world’s most dangerous dam in Iraq. The latter highlights the huge infrastructure problems facing many countries, and if wealthy countries cannot maintain their infrastructure, what chance to unstable and impoverished places like Iraq have?
(30 October 2007)
Headlines and excerpts at the original.
