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Oil Prices: It Gets Worse
Vivienne Walt, TIME Magazine
Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100 a barrel threshold in the not too distant future, as the global economy faces a serious energy shortage.
This gloomy assessment comes from the International Energy Agency, the Paris-based organization representing the 26 rich, gas-guzzling member nations of the Organization for Economic Cooperation and Development (OECD). The agency is not known for alarmist warnings, and its World Energy Outlook is typically viewed by policy wonks as a solid indicator of global energy supplies. In a marked change from its traditionally bland, measured tones, the IEA’s 2007 report says governments need to make urgent, bold decisions on energy policy, or risk massive environmental and energy-supply crises within two decades — crises and shortages that could spark serious global conflicts.
“I am sorry to say this, but we are headed toward really bad days,” IEA chief economist Fatih Birol told TIME this week. “Lots of targets have been set but very little has been done. There is a lot of talk and no action.” .
…”Most of the oil companies are going to be in an identity crisis, and need to redefine their business strategies,” Birol says. The soul-searching may have already begun, as oil executives begin sounding the alarm about the supply crunch that lies ahead. Last week, Christophe de Margerie, CEO of the French oil giant Total, told the Financial Times that even the target of 100 million barrels a day is an optimistic one for an industry that currently produces 85 million — far short of the 116 million barrels a day the IEA projects will be needed by 2030 to fuel the global economy.
And in a sharp departure from the usually reassuring comments offered by Big Oil executives, De Margerie said companies and governments now realize that they have overestimated the amount of oil that could be extracted from places difficult to reach and costly to explore. “It is not my view, it is the industry view,” he said. In other words, the message is that the current sky-high oil prices may not be a temporary burden on the world economy.
(7 November 2007)
Energy agency urges India and China to cut consumption
Jad Mouawad, New York Times
China’s and India’s surging fuel consumption poses a growing challenge to the world’s energy systems and, unless curbed, will strain global oil trade, push up prices and lead to substantially higher carbon dioxide emissions in coming decades, according to a report released Wednesday by an influential energy organization.
In unusually urgent tones, the International Energy Agency, which provides policy advice to industrial nations, urged advanced economies to work with China and India to cut overall growth in energy consumption.
Otherwise, the report said, runaway demand in those countries will put heavy pressure on supplies and make it impossible to achieve meaningful reductions in carbon dioxide emissions, the main culprit in global warming.
…Energy use by China and India is projected to double from 2005 to 2030. By 2030, they will account for nearly half the increase in global demand. Worldwide, energy consumption is to rise by about 55 percent.
China and India argue that it is unfair to blame them for rising energy prices and have resisted calls to limit carbon emissions when their economies are trying to catch up with development levels in the West. Energy use per person in the two countries remains much lower than in industrialized nations.
In its report, the energy agency recognized the legitimate aspirations of China and India to improve the lives of their people.
(7 November 2007)
Also at International Herald Tribune.
Energy needs ‘to grow inexorably’
BBC
The global demand for energy is set to grow inexorably through to 2030 if governments do not change their policies, warns a top energy official.
Nobuo Tanaka, executive director of the International Energy Agency (IEA), said such a rise would threaten energy security and accelerate climate change.
He said energy needs in 2030 could be more than 50% above current levels, with fossil fuels still dominant.
Mr Tanaka was speaking at the launch of the IEA’s World Energy Outlook report.
Rapid economic growth in China and India would be the main drivers behind the rise, he said as he unveiled the agency’s annual flagship publication.
…The World Energy Outlook 2007 report warned that much of the increased demand for energy would be met by coal.
As a result, energy-related carbon dioxide (CO2) emissions could rise by 57% – from 27 giga-tonnes in 2005 to 42 giga-tonnes in 2030, it said.
Even in the report’s “alternative policy scenario”, which takes into account the governments’ proposed action to save energy and cut emissions, CO2 levels are set to rise by 25%.
But it offered a glimmer of hope within its “450 Stabilisation” case study.
It described a notional strategy for governments to stabilise CO2 levels in the atmosphere at about 450 parts per million (ppm), which some scientists and policy makers suggest is an acceptable concentration.
(7 November 2007)
Energy outlook puts China in pole position
Angela Balakrishnan, Guardian
China will overtake the US as the world’s top energy consumer after 2010 as global energy demand is set to jump by 55% over the next 23 years, the International Energy Agency said today.
In its annual World Energy Outlook, the energy group said world needs will rise to 17.7bn tonnes of oil equivalent in 2030, from 11.4bn in 2005, an average increase of 1.8% each year.
As oil prices surge to flirt with the $100 a barrel mark, the IEA also warned that price could soar to $159 in 2030 due to higher-than-expected growth.
…The IEA urged the Organisation of the Petroleum Exporting Countries, supplier of more than a third of the world’s crude oil, to raise their production and relieve the upward pressure on oil prices amid fears of shortages.
“At current prices, the market is signalling that stocks need to be higher, something in the power of producers to address,” IEA’s executive director Nobuo Tanaka said.
Opec agreed to pump 500,000 more barrels a day from the start of this month but has shrugged off calls to raise its production further. It said the oil market is well supplied and price rises were fuelled by speculation and tensions in the Middle East.
(7 November 2007)
