The world is heading for a catastrophic energy crunch that could cripple a global economic recovery as key oil fields pass peak production, the International Energy Agency’s (IEA) chief economist has announced.
Higher oil prices brought on by a rapid increase in demand and a stagnation – or even decline – in supply could blow any recovery off course, Dr Fatih Birol told the UK’s Independent newspaper.
Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out much faster than previously predicted.
He also told the paper that global production is likely to peak in about ten years – at least a decade earlier than most governments had estimated.
The first detailed assessment of more than 800 oil fields in the world, covering three-quarters of global reserves, found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace calculated only two years ago, the paper reported.
In a warning to Britain and other western powers, Birol said that the market power of the few oil-producing countries that hold substantial reserves – mostly in the Middle East – would increase rapidly as the oil crisis begins to grip after 2010.
“The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40% share of the oil market and this will increase much more strongly in future,” he told the paper.
The IEA estimates that the decline in oil production in existing fields is now running at 6.7% a year compared to the 3.7% decline it had estimated in 2007.
The IAE is tasked with assessing future energy supplies by OECD countries.