Watch CBSN Live

IEA Economist Warns of Oil Shortfalls

It's not every day that an International Energy Agency economist can be heard publicly stirring the pot about peak oil and energy shortfalls in the near future. But old habits are sometimes put aside of new priorities; it appears that the agency is becoming more worried about the future.

In an interview hovering somewhere between a stern warning and scaremongering, the IEA's chief economist, Fatih Birol, has told the Independent that we're on the verge of a catastrophic "oil crunch" at current rates of consumption:

Even if demand remained steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to keep up with the expected increase in demand between now and 2030, Dr Birol said.

"It's a big challenge in terms of the geology, in terms of the investment and in terms of the geopolitics. So this is a big risk and it's mainly because of the rates of the declining oil fields," he said.

"Many governments now are more and more aware that at least the day of cheap and easy oil is over... [however] I'm not very optimistic about governments being aware of the difficulties we may face in the oil supply," he said.

The IEA has already adjusted its forecasts and doesn't predict that peak oil, or the day after which oil production will only decline, will come for another decade. Birol doesn't seem to be contradicting that prediction, but he is raising an alarm over whether the production levels he expects us to reach will be able to satisfy demand.

The problem is a rate of decline at existing fields that the IEA now acknowledges to be almost double its previous estimates. Today's figure is 6.7 percent, at which rate it's easy to predict future production that's entirely incapable of meeting even modest demands, unless significant new finds are made -- Birol's four to six new Saudi Arabias.

So while Birol isn't shouting "peak oil", he doesn't have to. The terrible consequence that peak oilers have been warning about for years is actually a supply shortfall. Birol's scenario is for all intents identical to that of onsetting peak oil, if only due to insufficient investment into production.

And for tomorrow? New finds like Saudi Arabia's Ghawar Field haven't been made for decades, so nobody is suggesting that we'll be able to replace it when it putters out. If the IEA's own estimates are correct, we're not just in for peak oil, but for a painful and prolonged crash of the world economy.

Birol's last word: "What we need to do is accelerate the mobilisation of renewables, energy efficiency and alternative transport." But if he's right about problems cropping up just a few years out, no acceleration will be enough.

View CBS News In
CBS News App Open
Chrome Safari Continue