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| IEA warns of 50% oil price rise by 2030 |
| 2005-11-03 |
| The International Energy Agency, the oil sector monitoring body, on Wednesday said that oil prices by 2030 would be 50 per cent higher than today if Saudi Arabia did not muster the political will to invest billions of dollars in new production. Fatih Birol, the group's chief economist, said in an interview with the Financial Times that Saudi Arabia, the most important oil producer, might not make the investment needed to ensure production met the strong demand growth in China and India. âIt is not a problem of availability of reserves or capital. We need to be sure that the increase in production will be high enough and a sustained production capacity increase policy is in place. That will need sustained political will,â he said. Saudi Arabia has plans to invest $14bn to raise output capacity from 11m barrels a day to 12.5m b/d by 2009, according to a report by Samba Financial Group, a Riyadh-based bank. The IEA said Saudi Arabia would need almost to double current output of 10m b/d to meet the expectations of demand in 2030. But Mr Birol said the kingdom might muster the long-term political will only to produce just over half the extra barrels deemed necessary. Iran and Iraq are also vital to ensuring adequate oil and natural gas supplies in the next 25 years. But both face political hurdles to achieving the necessary investment. Many Middle East countries fear that investing heavily in new oil supplies will deplete fields too quickly and cut revenues by depressing oil prices. Mr Birol said: âWe may end up with much less oil from the Middle East than we demand. There is substantial risk of substantially high oil prices if current investment in the Middle East is not stepped up substantially. âSuch high oil prices would be an additional trigger for major consuming nations to introduce policies to save oil and look for alternative sources. If they don't, the global economy but mainly the economies of the consuming nations will suffer.â The agency's price forecast, which is often conservative, forms the benchmark for many other forecasts, including those made by central banks, oil companies and big oil producers. The agency's near-term forecasts are below crude oil's current price range of about $60 a barrel because the IEA, which releases its World Energy Outlook next week, expects new supplies of oil and investment in platforms, pipelines and refineries to ease the current crunch. Oil demand is expected to more than double by 2030. Much of the increase will have to be met by countries in the Middle East and Africa. Meanwhile, natural gas demand will grow at a faster rate, with Qatar, Algeria and Iran as its biggest producers. |
| Posted by:lotp |
| #5 2 words: Canadian and American oil shales (sands). Live it. Love it. Oh, yeah, and ANWR drilling. Feel the magic. :-D |
| Posted by: Barbara Skolaut 2005-11-03 23:46 |
| #4 AS, High oil prices do not work in favor of Saudi Arabia for the reasons you cite in your third paragraph. Saudi is loosing its position as the sole swing producer. This may also be happening becasue they simply don't have the reserves to develop, but regardless of the reason, they are not investing in oil production facilities and this will lead to the exploitation of new energy resources. And the long run result will be cheaper energy, just as oil was cheaper than coal, coal cheaper than wood. So the Saudis may be at the apex of their income stream from oil. It sure would be nice if they could go back to being camel jockeys by 2030. I'd be willing to pay $4.00 per gallon to make that happen. |
| Posted by: Thraitle Jereger7453 2005-11-03 17:57 |
| #3 Gromgoru, you miss the implications of the article. In the past OPEC has been able to keep its cartel by always threatening to lower prices and supress production in other countries. If places like Saudi Arabia and (and to mention another example, Venezuela) aren't going to make the investments necessary to even make the threat, oil drilling in places like Canada and the US suddenly becomes much more viable. As do oil sands, oil shale, thermal depolymerization, etc... the result of all this is a short-term price rise, but a long term reduction in imports. The big question is, how much of this reduced investment is real, and how much scare noises put out by the countries in question to keep prices high. |
| Posted by: Abdominal Snowman 2005-11-03 17:48 |
| #2 If the World still need oil (except for petrochemical industry) in 2030, it deserves to become Muslim. |
| Posted by: gromgoru 2005-11-03 17:17 |
| #1 50%? Hell that sounds like good news. |
| Posted by: Shipman 2005-11-03 17:02 |