The Executive Director of the International Energy Agency (IEA), Nobuo Tanaka, has made public a harrowing forecast that foresees a global energy supply crisis in 2010, when demand is expected to begin rising up once more.
Nobuo Tanaka, the Executive Director of the IEA, expects that in 2010, global oil demand will recover and increase next year by about 1 million barrels per day (bpd). Tanaka also warned OPEC: “If you think about a rapid increase of prices through supply cuts, this will not aid in world recovery.”
Since July of last year, a dramatic drop in the price of oil from its $147 a barrel record peak, has scared away potential investment in alternative energy projects, and in already existing fields.
“While the economic slowdown itself serves to reduce CO2 emissions, if we don’t invest now we will have serious problems in the future,” continued Tanaka.
The Paris-based agency, which advises 28 industrialised nations, has expressed concern that some oil producing companies in the ruthless pursuit of pushing up prices are internationally deferring projects that would help expand supply.
Tanaka also predicted that even assuming absolutely no growth in oil demand, the world’s oil-producing nations need to bring on line an extra 45 million bpd of crude production by the year 2030 – in order to compensate for declines in fast aging oilfields.
In line with its rhetoric the IEA has advised the Organisation of Petroleum Exporting Countries (OPEC) to resist the urge – and the obvious short-term benefits – to make further output cuts.
The cartel has already made supply cuts of 4.2 million bpd, since September last year, in attempt to prop up dropping prices. Thus far the series of cuts have been largely unsuccessful in achieving their intended goal, and questions over implementation remain prevalent.
Cause for particular concern for the IEA is the undeniably damaging impact that the delay of 35 new oil projects, from within the Organisation’s twelve member nations, will have on future supply levels.
However, some of OPEC’s more outspoken members have already made their voice heard about the prospect of yet another round of cuts, which would be rubber stamped if approved at their next scheduled meeting in Vienna on March 15.
In a statement – which only serves to further highlight the severity of the issue – Mr. Tanaka, said: “If OPEC is aiming at a rapid price increase by cutting supply, maybe it would not be a good thing for the global economic recovery.”