Energy Agency forecasts $200 Oil - 11/14/08

The International Energy Agency IEA recently said global oil production will start falling by 2010 due to the lack of investment and due to the depletion of oil fields.  This will likely cause another spike in oil prices.

In IEA’s 2008 World Energy Outlook they predict a 45 percent in global energy demand by 2030 with half of that total coming from China and India.  IEA said demand will exceed production.

In the IEA report oil production would only increase by five million barrels a day by 2030, which is up from 84 million in 2007.  They predict total global oil production would increase by 106 million barrels a day by 2030.

IEA believes the bulk would not come from conventional crude oil, but costly methods of production like oil from Canada’s bitumen rich sands and the conversion of natural gas into liquid.

IEA said production not meeting demand will cause prices of over $100 a barrel between now and 2015 and $200 a barrel by 2030.  We believe $200 oil will be much sooner than IEA’s predictions.

The IEA said there is not a shortage of oil, but the lack of investment in the production.  IEA said a $26 trillion investment will be needed over the next 20 years to ensure the world has enough energy.

What is being built and what is needed to keep pace with demand is set to widen sharply after 2010.

Government must rapidly diversify from the dependency of oil.  Unfortunately with the recent drop in oil and inflation fears at bay, this most likely will not be a priority.

The IEA report said without radical change the world was facing an increase in temperatures of 6C.  “Preventing catastrophic damage ultimately requires a major decarburization of energy sources.”

The report went on to say renewable energy would grow by 7.2 percent, which would overtake gas to become the second largest source of energy for electricity after coal by 2010.

Back to the Resources Page