One of the world’s top energy officials has issued a stark warning that’s rippled through global oil markets. Fatih Birol, the chief economist at the International Energy Agency, says the age of cheap oil is over and high prices are here to stay.
Fatih Birol talked to National Radio’s Kathryn Ryan on 25 May 2011, and you can listen to the interview here:
Patrick Morgan made the following notes on the talk – notes that are well worth reading. Point your favourite local transport planner to those links above – even better, persuade Steven Joyce to listen!
- Era of cheap oil is over, for ever
- Learn to live with higher prices
- This is a major risk to global economy
- peak oil is a reality
- peak production of conventional oil was 2006
- high prices are here to stay
High prices are caused by:
- strong demand from China and developing countries, esp
- while production has some ‘challenges’. Production is
declining in many countries, few alternatives to Middle East oil
- unrest in Middle East / Africa creates uncertainty.
Other points Fatih Birol made during the discussion
Production could be increased if producing countries decide to.
Seasonal demand expected in next few months, driving season
China had a dry year so less hydro-electric generation and
more from fossil fuel
Era of cheap oil is over, for ever
Learn to live with higher prices
global economy vulnerable since the financial crisis
unconventional sources can take up the slack e.g. Natural
gas, Venezuela, Canada can add 10m b/d
Will Middle East decide to increase production?
4 new Saudi Arabias needed to meet projected growth in
demand. A tall order.
How can we move from an oil-based economy?
We need to start now.
Ryan: Why did IEA dis peak oil as recently as 2008?
Birol claimed IEA was the first to make a study of
Many govts taking oil security seriously e.g China, US,
90% of growth comes from cars, trucks, jets.
1. Use these more efficiently. A major issue.
2. China: electric cars, could reduce oil dependence
3. use biofuels
Oil dependence is our Achilles heel.
High prices hurt economic recovery.
Sub-Saharan Africa is affected the most.
Will lead to new frictions between nations.
OPEC meets is 2 weeks.
Oil prices could come down if producers tell the markets
they will increase production.
US govt could release stockpiles to reduce pressure on
Forecasts 98m b/d by 2035, mainly from Iraq, Saudi and