A disastrous energy crunch is looming because most of the major oil fields in the world have passed their peak production, a leading economist said yesterday.
Fatih Birol, chief economist with Paris-based International Energy Agency (IEA), said an “oil crunch” within the next five years could jeopardize recovery from the global recession.
Higher oil prices brought on by a rapid increase in demand and stagnation, or even a decline, in supply could derail the recovery, Birol said in an interview with The Independent newspaper.
Birol said many governments appeared unaware that oil is running out faster than previously predicted, with global production likely to peak in about 10 years — at least a decade earlier than most had estimated.
“One day we will run out of oil. It is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day,” Birol said.
“The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously,” he said.
An assessment of more than 800 of the world’s major oil fields has found most of the biggest ones have already peaked and decline in oil production is running at nearly twice the pace as calculated two years ago.
Birol also warned that the market power of the handful of top oil producers would increase rapidly when the oil crisis begins to tighten after next year.
“The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40 percent share of the oil market and this will increase much more strongly in the future,” he said.
The IEA, the energy monitoring and policy arm of the 30-nation Organization for Economic Cooperation and Development, said last month that signs of a strong rally in global economic growth and oil demand were fading.
However, the IEA said in its latest monthly report that there could be a dramatic turnaround for demand next year.
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