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  • cija2009 cija2009 Aug 5, 2009 6:20 AM Flag

    Warning: Oil supplies are running out fast


    I guess Dr Birol is right .....and Goldman Sachs also Oil could go to $100 soon or later..

    Warning: Oil supplies are running out fast

    Catastrophic shortfalls threaten economic recovery, says world's top energy economist

    The world is heading for a catastrophic energy crunch that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production, a leading energy economist has warned.

    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.

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    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.

    "One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day," Dr Birol said. "The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously," he said.

    "The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40 per cent share of the oil market and this will increase much more strongly in the future," he said.

    There is now a real risk of a crunch in the oil supply after next year when demand picks up because not enough is being done to build up new supplies of oil to compensate for the rapid decline in existing fields.

    The IEA estimates that the decline in oil production in existing fields is now running at 6.7 per cent a year compared to the 3.7 per cent decline it had estimated in 2007, which it now acknowledges to be wrong.

    "If we see a tightness of the markets, people in the street will see it in terms of higher prices, much higher than we see now. It will have an impact on the economy, definitely, especially if we see this tightness in the markets in the next few years," Dr Birol said.

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    • And none to soon. The history of man on earth won't have anyone to tell it,or anyone to listen, if we continue using oil at the present rate. Natural forces can deconstruct our workings faster than we can rebuild.

    • Weren't they saying this exact same thing in the 1930s and 40s? Eventually it has to run out, but technology has and will continue to find and create access to new sources.

      • 1 Reply to dirk_duck
      • Hi Dirk,

        Yup, sure did. I could give you chapter and verse on the reasons, and why those reasons have been dealt with, but somehow I don't think you really want to know.

        An interesting thing about forecasts is this. You can disprove a pessimistic forecast, because the date passes and nothing happens. But you can't disprove an optimistic one, until the event sneaks up and surprises you. So, in consequence, the only forecasts ever proved wrong are pessimistic, and so the optinistic ones must be right, right? And that leads people to think that sunny days are here forever.

        Let's see: the US Army Corps of Engineers thinks it's going to happen, the Int. Energy Agency thinks it's going to happen, the UK's Research Councils are about to issue a report saying it's going to happen. So this isn't just a frightener put about by fringe loonies, woolly minds in woolly hats and conspiracy theorists. It's being put about by some very astute techies.

        And, in conclusion, when you say "technology has and will continue to find and create access to new sources", I'd quite like some idea what new sources you have in mind, otherwise it's just an assertion without evidence. Tar? Gas hydrates? Dilithium crystals? What's your belief?

    • Hi duuke,

      Progress, I think, is defined differently by different people. Or at least the merits of progress in various directions. And you do leave open the questions I asked, about dealing with those who may become "have-nots", and whether free markets are the best tool for energy management in this time and place. They may be, I don't know, but I suspect not.

    • The history of mankind on Earth, taken as a whole is one of progress, yes. However, it is shameful and irresponsible to ignore great steps backward, like the fall of the roman empire, or periods of stagnation like the introspective chinese empire. Perhaps you should look up the word "hubris" sometime?

      Oh, and I can't wait to tell the right-wing apocalyptic christians that they're actually leftists.

    • Yeah its almost out..I guess that is why tankers full to the brim are being used as storage and Opec is startuing to increase outflows because they are getting killed....

      in YEARS it will be in demand...not months
      a weak dollar is the only thing going for oil right now

    • Who let Henny Penny out??

    • Not to worry, Obama has little Elf's that will make us
      magic energy and the world will be good and beautiful again and we all will run around naked and love one another and food will be free and plentiful and our health will be great and we all will drive a new lexus...and....and...and

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