IEA sees oil supply crunch looming - Reuters

[Eugene]

Source: Reuters

IEA sees oil supply crunch looming
Mon Jul 9, 2007 9:10AM EDT

By Alex Lawler

LONDON (Reuters) - World oil demand will rise faster than expected
to 2012 while production lags, leading to a supply crunch, the
International Energy Agency said on Monday.

In its Medium-Term Oil Market Report, the adviser to 26 industrialized
countries said demand will rise by an average 2.2 percent a year
between 2007 and 2012, up from a previous medium-term forecast of
2 percent.

The outlook, which updates an IEA forecast last issued in February,
coincides with a jump in oil prices to more than $75 a barrel, closing
in on a record high near $79, on concerns of a tightening market.

"Despite four years of high oil prices, this report sees increasing market
tightness beyond 2010," the IEA said.

-snip-

Read more: http://www.reuters.com/article/topNews/idUSENG00031520070709

---

The article goes on to say they forecast "plateau oil"
rather than "peak oil."

---

Source: BBC News

Last Updated: Monday, 9 July 2007, 11:39 GMT 12:39 UK

Oil supplies 'face more pressure'

World oil demand will rise faster than expected, while supplies
will remain tight, the latest International Energy Agency (IEA)
report has warned.

The IEA predicted demand would rise by an average 2.2% a year
between 2007 and 2012, up from previous estimates of 2%.

It added that geo-political tensions and a lack of spare capacity
in Opec production would also limit supplies.

By 2012, biofuel production would hit 1.8 million barrels, more
than double 2006 levels it said.

However, while supplies of the green fuel are set to surge, it is
likely to remain marginal with just a 2% slice of the energy market,
the IEA said.

-snip-

Read more: http://news.bbc.co.uk/2/hi/business/6283992.stm

[GliderGuider]

1. This is significant - the IEA has essentially called the peak.

It added that other factors including rising refinery costs, engineer shortages and strong demand in other energy markets would also put pressure on oil supplies.'

"Certainly our forecast suggests that the non-OPEC, conventional crude component of global production appears, for now, to have reached an effective plateau, rather than a peak," the report said.

This is a stunning change of language and position for the "Don't Worry Be Happy" Gang at the IEA.

They are essentially calling "Peak Lite": a production plateau brought on by a combination of geological, political and economic factors. They are saying there won't be any more oil for the foreseeable future, so get ready for price increases as supply and demand balance out.

Also:

By 2012, biofuel production would hit 1.8 million barrels, more than double 2006 levels it said.

However, while supplies of the green fuel are set to surge, it is likely to remain marginal with just a 2% slice of the energy market, the IEA said.

So don't expect biofuels to save your bacon.

Also, note that if 1.8 mbpd represents 2% of the "energy market", that means they estimate the whole "energy market" to represent 50*1.8=90 mbpd which is within a rounding error of today's all-liquids hydrocarbon market. They are predicting no growth in supply over the next 5 years.

This is a very important news item from the Peak Oil perspective. Get ready for $100 oil by the middle of next year.

[phantom power]

2. Whee.

[hogwyld]

3. Add to that

the crashing production at Cantarell in Mexico, along with the drops of 2-4% in the middle east, and you can see that the really bleak times will be here sooner than anyone anticipated. Of course, after China and us "duke it out" over resources, there will only be half the population, so demand will drop. Yipee.

[Delphinus]

4. "So don't expect biofuels to save your bacon."

You're right - but the sheeple outweigh the aware ones in my neck of the woods and trying to convince them of this is an unending challenge.

But, since I'm replying to this, let me throw this question out. I was listening to NPR this morning, and one of the segments was funded in part my a college in North Carolina that's researching hydrogen fuel cells. Can someone explain, in English, as I am NOT a scientist, whether or not hydrogen fuel cells is an alternative energy solution. TIA :)

[phantom power]

5. I will make a couple points about H2...

1) hydrogren is an energy storage technology, not a "source." Most reporting hopelessly confuses this important fact. If you go to a "hydrogen economy" it implies that the hydrogen is manufactured in some way, and that requires energy. If you manufacture the hydrogen from/with fossil hydrocarbons, you haven't accomplished anything. in fact, you've taken a step backwards, since any tranformation incurrs additional loss due to thermodynamics.

2) hydrogen as a pure gas (H2) is a lousy energy delivery technology. It's hard to work with. If you want to manufacture a fuel for mass indidual delivery/consumption, there are several better alternatives: methane, propane, DME.

3) hydrogen might be a useful industrial chemical stock. For instance, it's great for making methane, propane, etc. So, it's possible to imagine manufacturing H2 at large industrial plants, and then using that for manufacturing more useful fuels.

4) the real problem we face is not our fuel. It's our energy. right now, our fuel source (fossil hydrocarbons) is also our energy source. Our energy source and our fuel source are running out simultaneously, because they are the same thing. In the future, those two things will be decoupled. So we're facing a bunch of confusion. We need new energy sources, which in turn raises the issue of what our new fuels will be.

[Delphinus]

8. Thank you, phantom.

I shall copy and save this so I'll better comprehend the subject and know how to point people in the future. :)

[wordpix]

6. my financial advisor who watches these things says this price rise is due to fear

He says we have plenty of oil and the market is being manipulated to keep prices high. However, I'm not in total agreement as I think we've reached peak oil.

[GliderGuider]

7. Fear of Peak Oil, perhaps?

I'd be very concerned about a financial advisor who talks about the crude oil market being manipulated. I've never seen a market that was less able to be manipulated than the oil market - there are simply too many buyers and sellers spread around the globe to make that feasible. Oil prices have been rising since January. That's a long time to be building in a fear premium, especially in the absence of any hurricanes or other major new above ground factors.

The rising price is a simple product of rising demand meeting a constrained supply. Your advisor is in for one hell of an education over the next year or two. The peak is here now, and things are just going to get more and more interesting from here on out.

[Dogmudgeon]

9. Dead accurate.

The energy market(s) have actually been growing increasingly unmanageable since the 1973 OPEC boycott. The demand destruction of that event created an ideal market vacuum into which the "Cowboy" faction (in Ogilvie's terms) extended itself. As long as there was ample oil and political stability in the Mid-East, the prices remained low, and the Texas-based oil barons rebuilt demand for their and their Saudi clients' product.

But manageable? They rode the crest of a long wave and sold the foam at enormous profit.

This led to extreme conservatism and timidity on the part of investors. As a result, fossil fuel became "the only game in town" as nuclear energy, "alternative" energy, and fundamental technical improvements were left to go begging. What should have become central was instead marginalized.

Today, the markets are going from unmanageable to volatile. We have never been more dependent on a single industry, and at a time when the investment community is both chickenshit and myopic. Furthermore, the Texas Cowboys and the Saudis appear to be cashing out.

The main action will soon shift to "carbon credits". The concept had some merit once, but implementation will turn it into the most efficient method ever devised for enriching the affluent directly at public expense. It will become an infinitely-inflatable commodity that rewards the production of carbon greenhouse gases, backed by the treasuries of every country stupid enough to get talked into the swindle.

And after that, comes the flood.

--p!