Fatih Birol: We can't cling to crude

Aurora · Post by **Aurora** » 02 Mar 2008, 18:46

http://www.independent.co.uk/news/busin ... 90178.html

Fatih Birol - Independent - 02/03/08

We are on the brink of a new energy order. Over the next few decades, our reserves of oil will start to run out and it is imperative that governments in both producing and consuming nations prepare now for that time. We should not cling to crude down to the last drop ? we should leave oil before it leaves us. That means new approaches must be found soon.

Even now, we are seeing a shift in the balance of power away from publicly listed international oil companies. In areas such as the North Sea and the Gulf of Mexico, production is in decline. Mergers and acquisitions will allow "big oil" to replenish reserves for a while,and new technologies will let them stretch the lives of existing fields and dip into marginal and hard-to-reach pools. But this will not change the underlying problem. Oil production by public companies is reaching its peak. They will have to find new ways to conduct business.

Increasingly, output levels will be set by a very few countries in the Middle East. This does not necessarily mean an immediate return to the price shocks of the 1970s, because producing countries have learnt that stability is in their interests. Even so, it is not certain that they are ready to increase production to meet growing world demand. Building new capacity takes time.

On the demand side, we see two big transformations. Wherever possible, people have already switched from oil, particularly for industrial use, home heating and electricity generation. In future, oil will mainly be used in the transport sector, where we have no readily available alternatives.

The other transformation is that the bulk of demand growth is coming, and will come in the future, from China and India. Here again, car ownership is the main driver. By 2020, India will be the world's third-largest oil importer, and we expect China will be importing 13 million barrels in 2030, which means another US in the market. In terms of car sales, we estimate that by 2015 at the latest, more cars will be sold in China than in the US.

What will all this mean for the price of petrol? The indications are that if the producers don't bring a lot of oil to the markets, we may see very high prices ? perhaps oil at $150 a barrel by 2030. If the governments do not act quickly, the wheels may fall off even sooner.

The developed, oil-consuming countries can do several things to ease the transition to the new energy order. One would be to boost vehicle efficiency. Another would be to make better use of biofuels, although to be helpful, these need to be produced cheaply in developing countries like Brazil, not by heavily subsidised farmers in the developed world.

High prices also make it profitable to produce fuel from unconventional sources such as tar sands. But to do this requires plenty of energy, mostly from natural gas, and the process emits lots of CO2. Tar sands are attractive, but like biofuels, they will never replace Middle East oil.

In the long term, we must come up with an alternative form of transport, possibly electric cars, with the electricity being provided by nuclear power stations. The really important thing is that even though we are not yet running out of oil, we are running out of time.

Dr Fatih Birol is chief economist at the International Energy Agency.

Totally_Baffled · Post by **Totally_Baffled** » 02 Mar 2008, 18:54

From this I assume the IEA are still sticking to their 2030 peak date?

$150 in 2030, have they not noticed that we have already reached $103!?

We need a forehead slapping smiley! lol

bigjim · Post by **bigjim** » 02 Mar 2008, 22:55

perhaps oil at $150 a barrel by 2030

Hmmm. I'd think 2009 would be a more realistic estimate. Or do you think he meant $1500 a barrel?

SunnyJim · Post by **SunnyJim** » 03 Mar 2008, 09:46

Fatih wrote:This does not necessarily mean an immediate return to the price shocks of the 1970s, because producing countries have learnt that stability is in their interests.

Hahaha! In realterms thats exactly where we are already!

WAKE UP MAN!!!

Post by **clv101** » 03 Mar 2008, 09:52

Birol's not doing bad. He's walking a fine line in a government agency. Fundamentally he's one of us, just being heavily leaned on by the many energy-optimists in the IEA and member governments.

SunnyJim · Post by **SunnyJim** » 03 Mar 2008, 09:58

Yeah, I know. Just frustrating isn't it? Seeing how he's despirate to shout 'wake up', but is so shackled....

SherryMayo · Post by **SherryMayo** » 03 Mar 2008, 10:36

I'm with Clv101 - Fatih Birol has been quite a bit more candid that many of his colleagues in the IEA over the years.

SunnyJim · Post by **SunnyJim** » 03 Mar 2008, 11:02

I agree entirely. When quoted 'off the record' he's even more candid. You just know that he'd love to really shout it from the roof tops. The world won't listen.....

emordnilap · Post by **emordnilap** » 03 Mar 2008, 11:11

It might be more honest than many from tptb, but it's still a load of bollox.

PaulS · Post by **PaulS** » 03 Mar 2008, 13:58

We have had 68% increase in dollar terms in the price of oil over the past 12 months. Projecting that forward would give us $170 oil price this time next year, not just $150.

... maybe we will have a recession and keep oil low, although even under this scenario the $ value of oil may rise as the dollar plummets due to the recession hitting first/ mainly the USA.

So I am expecting $150+ this time next year.
Time for another competition?

SunnyJim · Post by **SunnyJim** » 03 Mar 2008, 14:59

$150 on 17 Nov 08 is my guess.

emordnilap · Post by **emordnilap** » 03 Mar 2008, 15:03

If there's one thing you can't predict, it's the future.