The IEA is the international organization that many governmental bodies look to for authoritative data on energy, put in place during the energy crisis of the 1970s. They put out a major report once per year, and I have been reading the executive summary of this report for about 7 or 8 years. It is fascinating to see how the report evolves year after year. I wrote a piece for Energy Bulletin a few years ago, looking at the trend of the reporting from 2005 through 2009 (The IEA and World Oil Supply Projections), and I’ve been wanting to update that piece, and to look at 2010 – 2012.
One thing I’ve noticed about the mainstream media over the last number of years is the tendency to give large headlines to any story offering rosy projections for fossil fuel production, and to bury stories that question those rosy scenarios. And so this year, as the World Energy Outlook 2012 was released, there have been a flood of stories trumpeting the projected oil bonanza from the United States of all places! Funny thing is, when you read the report (or at least the Executive Summary), you see that the devil is in the details, and the big picture (sometimes you have to read between the lines on these reports written by committee) is not really so rosy. And none of the articles I read ABOUT the report – even the ones by the energy pessimists – were doing a good job pointing out the troubling things this report points to. So I thought I was going to have to do it.
But I dawdled. I took some notes, but haven’t gotten around to trying to write that article. Fortunately someone far more skilled than I has said what I thought needed to be said. I will pass on this quote from the report, which I don’t think Klare mentions in his article below. For all of the excitement about the natural gas revolution in the U.S. (thanks to ‘fracking’), we need to note these VERY important caveats from the WEO report (emphasis mine):
“But the unconventional gas business is still in its formative years, with uncertainty in many countries
about the extent and quality of the resource base. As analysed in a World Energy Outlook
Special Report released in May 2012, there are also concerns about the environmental
impact of producing unconventional gas that, if not properly addressed, could halt the
unconventional gas revolution in its tracks…”
And now, here’s the promised article, another ‘must read’ from Michael Klare:
World Energy Report 2012by Michael Klare, TomDispatch
Rarely does the release of a data-driven report on energy trends trigger front-page headlines around the world. That, however, is exactly what happened on November 12th when the prestigious Paris-based International Energy Agency (IEA) released this year’s edition of its World Energy Outlook. In the process, just about everyone missed its real news, which should have set off alarm bells across the planet.
Claiming that advances in drilling technology were producing an upsurge in North American energy output, World Energy Outlook predicted that the United States would overtake Saudi Arabia and Russia to become the planet’s leading oil producer by 2020. “North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world,” declared IEA Executive Director Maria van der Hoeven in a widely quoted statement.
In the U.S.,the prediction of imminent supremacy in the oil-output sweepstakes was generally greeted with unabashed jubilation. “This is a remarkable change,” said John Larson of IHS, a corporate research firm. “It’s truly transformative. It’s fundamentally changing the energy outlook for this country.” Not only will this result in a diminished reliance on imported oil, he indicated, but also generate vast numbers of new jobs. “This is about jobs. You know, it’s about blue-collar jobs. These are good jobs.”
The editors of the Wall Street Journal were no less ecstatic. In an editorial with the eye-catching headline “Saudi America,” they lauded U.S. energy companies for bringing about a technological revolution, largely based on the utilization of hydraulic fracturing (“fracking”) to extract oil and gas from shale rock. That, they claimed, was what made a new mega-energy boom possible. “This is a real energy revolution,” the Journal noted, “even if it’s far from the renewable energy dreamland of so many government subsidies and mandates.”
Other commentaries were similarly focused on the U.S. outpacing Saudi Arabia and Russia, even if some questioned whether the benefits would be as great as advertised or obtainable at an acceptable cost to the environment…
Shrinking World Oil Supply
Given the hullabaloo about rising energy production in the U.S., you would think that the IEA report was loaded with good news about the world’s future oil supply. No such luck. In fact, on a close reading anyone who has the slightest familiarity with world oil dynamics should shudder, as its overall emphasis is on decline and uncertainty.
Take U.S. oil production surpassing Saudi Arabia’s and Russia’s. Sounds great, doesn’t it? Here’s the catch: previous editions of the IEA report and the International Energy Outlook, its equivalent from the U.S. Department of Energy (DoE), rested their claims about a growing future global oil supply on the assumption that those two countries would far surpass U.S. output. Yet the U.S. will pull ahead of them in the 2020s only because, the IEA now asserts, their output is going to fall, not rise as previously assumed…
Other worthwhile and related articles:
You would think we were swimming in oil. The International Energy Agency’s (IEA) latest World Energy Outlook forecasts that the United States will outstrip Saudi Arabia as the world’s largest producer by 2017, becoming “all but self-sufficient in net terms” in energy production. While the “peak oil” pessimists are clearly wrong, so is a simplistic picture of fossil fuel abundance.
Canada’s New Pipeline Woes
Ian Austen, New York Times
AND you thought pipeline politics in the United States were treacherous. Rebuffed by Washington on bringing the Keystone XL pipeline down through the western United States, Canada now finds that its Plan B — to build a pipeline to its west coast for shipping to Asia — has become mired in domestic politics thick enough to rival the tarlike oil it hopes to sell.
Getting the oil to the Far East first requires building a $5.5 billion, 730-mile pipeline from landlocked Alberta over a series of mountains to the coast of northern British Columbia. About 220 tankers a year would then navigate some of Canada’s most scenic yet treacherous waters to complete the trip…
(23 October 2012)
IMF study: Peak oil could do serious damage to the global economy
Brad Plumer, Washington Post
The world isn’t going to run out of oil anytime soon. But there’s still concern among various geologists and analysts that our oil supply won’t grow as quickly or as easily as it used to. We’ll have to resort to harder-to-drill oil to satisfy our crude habits. More expensive oil. That would push prices up. And high oil prices could act as a drag on growth.
So how bad would it be if peak oil was really upon us? That’s a question that two IMF economists try to tackle in a new working paper, “Oil and the World Economy: Some Possible Futures.” (pdf) The authors, Michael Kumhof and Dirk Muir, don’t make any definitive predictions about how the oil supply will evolve. Rather, they try to model a number of different scenarios in which oil does become more scarce and the world tries to adapt.
The paper itself offers an interesting look at how the world might cope with higher oil prices, so let’s take a look at the various scenarios:…
(27 October 2012)
Link to report