"There will again be a less spare capacity from 2013, meaning oil prices are not likely to return to levels from a few years ago any time soon," said Nobuo Tanaka, the executive director of the IEA, the energy adviser for the world's most industrialised nations told an oil and gas conference.
On Tuesday, Tanaka told Reuters in an interview that spare capacity would rise to 4 million barrels per day (bpd)in 2008 from 2 million bpd now, and new projects would come onstream.
With spare capacity thinning again, oil prices could then spike on potential supply disruptions caused by factors as diverse as hurricanes or geopolitical conflicts, he said.
Oil prices rose sharply in the first half of this year to strike a record high at more than $147 a barrel in July. They have since fallen to about $117 as demand in many developed countries weakened.
Tanaka said on Tuesday that even at present levels, prices were still high and harmful to the global economy, especially emerging markets.
He also said that oil output from countries outside the Organisation of the Petroleum Exporting Countries was likely to peak in the next decade.
"Non-OPEC output expected to peak by the middle of the next decade. Production will increasingly be dominated by a small number of major producers," Tanaka told conference delegates.
Although suppliers tend to be criticised for high oil prices, Tanaka reiterated his view that consumers should continue to conserve energy further and fuel subsidies in such countries as China should be lifted.
The IEA says such subsidies create unnatural oil demand growth as they prevent the market mechanism of high global prices denting demand.
"Unless government policy changes, world energy demand will grow by 55% by 2030. Despite all the attention given to wind, bio, solar, the reality is we are still heading for a fossil future - 84% of the overall increase to come from oil, gas and coal," Tanaka said.
The IEA estimates oil subsidies in China, India and the Middle East totalled $70 billion in 2006 and are even greater now, he said.
Tanaka also said that the objective to cut emissions of carbon dioxide by 50%, a target pledged by the leaders of the G8 nations to fight with global worming, would achievable but extremely tough.
About $45 trillion of investment, or roughly 1% of the world's GDP, would be necessary to achieve the target, including building 17,000 large wind power turbines and 32 nuclear power plants every year between now and 2050, he said.
Carbon capture and storage (CCS) technology will be crucial and it is urgent that new plants be built soon.
He said the price of carbon dioxide would have to be at least $50 a tonne to decarbonise the power sector.
