IEA Sees Oil Crunch Looming.

[tarabell]

The report points to a greater reliance on OPEC, source of more than a third of the world's oil.

Alex Lawler – Reuters.com – July 9, 2007

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. "It is possible that the supply crunch could be deferred -- but not by much."

The IEA's previous Medium-Term report called for world demand growth of 2 percent a year between 2006 and 2011. It now expects global demand to reach 95.8 million barrels per day (bpd) from 86.1 million bpd in 2007. The forecast assumes average global GDP growth of 4.5 percent annually.

"The results of our analysis are quite strong," said Lawrence Eagles, head of the IEA's Oil Industry and Markets Division. "Something needs to happen." "Either we need to have more supplies coming on stream or we need to have lower demand growth."

The Paris-based IEA also said additional global refining capacity over the next five years will lag earlier expectations as rising costs and a shortage of engineers delay construction. It said world production of biofuels would reach 1.75 million bpd by 2012, more than double 2006 levels, but the fuel will remain marginal as economics hobble further growth.
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[WriConsult]

Scary stuff: steadily rising demand, and flat or declining production. With low elasticity I would expect BIG price spikes over the next 5 years. Plus side is this will lead to huge developments in alternative energy sources.

You never know, it might even lead to some conservation. Happened once before.

[xcel]

Hi Tarabell:

___Great find as always. What scares me the most is our government absolutely has to know this train wreck is headed our way but is doing so little to prepare our fellow citizens for it

___The fortunate item is the first people to get knocked off the car kick will be the burgeoning Asian markets given the price of fuel will quickly outstrip the price of acquiring the vehicle no matter how cheap the vehicle gets. The Indian auto initiative at $2,500 - $3,000 may seem like a great deal to get someone of limited means in a car but at $5.00 per to fuel the thing for maybe 25 miles worth of drive per gallon, I think the realities will save us from ourselves.

___It still does not relieve us of the fact that $5.00 + fuel will cause massive disruption here in the US. Ford, GM, Toyota, Honda and everybody else’s truck/SUV/Crossovers will see that market simply evaporate as well as lower income members of our society losing the ability to drive for anything but work and even that will be a stretch. Yet another positive from a negative in the long run I guess? PHEV’s will make huge headlines sooner then later because the market will demand it but who is really ready for a PHEV other then HyMotion/A123Systems conversions?

___Wriconsult, I think the conservation measures will pick up steam once the disruptions begin. I am still saddened to see the current purchase patterns of not so fuel efficient automobile purchases but that too will be cured with market forces taking hold.

___I believe the latest CAFE’ standard proposals will become irrelevant as fuel prices continue to escalate at double digit rates because even the wealthiest YaHoo will come to see the light eventually. Does anyone remember when someone dumped a bunch of $1 bills at a major League ball park a few weeks ago? Even the guys making $Millions a year on the field were picking them up. That alone tells me no matter how much someone may think their income is above the storm brewing below, few simply throw it away for the heck of it and this will eventually save us all? It will be a very painful transition as we will definitely see a recession and possibly even worse before we crawl out of the hole but the technologies available today will come to see the light of day for the betterment of all imho.

___Good Luck

___Wayne

[Earthling]

I can't believe anyone would be so clueless as to go out and buy a gas hog SUV, but I'm sure there is someone signing on the dotted line right this minute for one.

Long before oil runs out it will go way up in price. That will help our cause in using less of it, and if we do it right, we can get out of the geopolitical morass of thinking of the Persian Gulf area as vital to our national interests.

Harry

[Earthling]

The scary part is to look at who owns the oil, and who is about to collect the huge increase in revenues from it.

Clue: these aren't our friends!

Harry

[Fenrir]

Has anyone seen A Crude Awakening: The Oil Crash? I acquired a copy of it after reading a post by Mike Dabrowski in another forum. Talk about scary. More and more experts are saying peak oil isn't 100 years, 50 years, or even 20 years away... Oil production has peaked everywhere on earth except the Persian Gulf. No substantial oil finds have been made in the last 30 years. We're close enough to peak oil to hock a loogey on the down slope. Get ready for the rollercoaster ride of your life. Buy a bike, and plant a garden.

[brick]

This stuff makes me legitimately nervous. I may have a Prius and the modest skills required to make EPA, but that isn't the only thing we're all up against. How do we fix the fact that commuting from the 'burbs to work and back eats up so many freaking miles every day? This has been on my mind a lot lately while I try to figure out where it's possible to buy a house in a nice location that isn't a minimum of 30 miles from work. (Some places are 40!) All the hybrid cars in the world can't solve our problem. This will suck for all of us with the you-know-what hits the fan.

[Fenrir]

Worst case scenario, you'll be more concerned with getting enough food than with getting to work. Work for many will cease to be when the economy shrinks by a large amount.

[pumaman]

Wow, this is getting depressing. Please tell me that in the future there will still be beer.

[xcel]

Hi Pumaman:

___There may be some swill to be found at the local taverns but all the beer will instead be turned into Ethanol to run Billy Bob’s Chevrolet Avalanche FFV at 10 mpg so he can pull his 225 HP and 1.5 mpg Bass boat to the fricken lake 60 miles away!

___Nahh, Billy Bob will be the first one to run out of fuel to get to work and demand the government do something about his plight

___Fenrir, oil has peaked in the Middle East as well according to the some of the EIA docs I have seen in the recent past … They can still pump more but not without a ton of investment and that is barely happening. Get your Money out of $’s would be a start and save up for an HSD running PHEV conversion as well.

___Good Luck

___Wayne