Abrupt rise in oil prices possible - IEA

Wednesday 07 November 2007 22.18
Oil - Demand has increased worldwide
Oil - Demand has increased worldwide

The International Energy Agency has warned that a global oil crisis involving an abrupt escalation in oil prices before 2015 cannot be ruled out.

In its world energy outlook for 2007 the agency says that it is very uncertain whether new oil production in the period up until 2015 will be enough to compensate for the natural fall off in output from existing oil fields and keep pace with the projected increase in demand.

The agency said that the consequences of unfettered growth in world energy demand are alarming.

This is the strongest warning yet from the IEA, which is a sister agency of the OECD based in Paris.

The agency has become alarmed because the pace of global economic growth has quickened, driven mainly by China and India.

It says securing a reliable and affordable supply of oil is going to become a formidable challenge for all because of growing demand.

It says that to satisfy this demand Middle Eastern oil producers would have to invest more $1.1 trillion in oil facilities, and increase their supply of oil by 87% by 2030.

The IEA warns however, that there are growing doubts about the willingness, and ability, of national oil companies to make these investments.

The IEA is calling for vigorous, immediate, and collective policy action by all governments to move the world on to a more sustainable energy path.

Carbon taxes and stringent efficiencies measures, it says, are the fastest and cheapest way to do it.