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October 28, 2008

IEA: World Oil Supplies Declining Faster Than Expected

We have temporarily dodged a bullet. The upcoming IEA World Energy Report will say that global oil supplies are falling faster than expected, and massive investments are required just to (almost) stand still. The only thing making things marginally less calamitous? The current downturn-induced demand collapse has given us a little more time to prepare for the inevitable.

Without extra investment to raise production, the natural annual rate of output decline is 9.1 per cent, the International Energy Agency says in its annual report, the World Energy Outlook, a draft of which has been obtained by the Financial Times.

The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as those in the North Sea, Russia and Alaska, and meet long-term de­mand. The effort will become even more acute as prices fall and investment decisions are delayed.

…The agency says even with investment, the annual rate of output decline is 6.4 per cent.

…All the increase in oil demand until 2030 comes from emerging countries, while consumption in developed countries declines.

As a result, the share of rich countries in global demand will drop from last year’s 59 per cent to less than half of the total in 2030.

More here.

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