The International Energy Agency yesterday predicted world energy demand will rise 1.6 percent per year on average between 2006 and 2030 and called for massive investment in energy infrastructure to prevent a supply squeeze.
The IEA's base scenario for energy demand has fallen due to the global economic slowdown and higher oil prices, but the agency stressed that a delay in spending on new projects due to the credit crisis could lead to a "supply crunch that could choke economic recovery".
The IEA expects demand for oil to rise from 85 million barrels per day currently to 106 million barrels per day in 2030 - 10 million barrels per day less than projected last year.
The agency said that these trends call for energy supply investment of $26.3 trillion to 2030, or more than $1 trillion a year, but it noted that tight credit conditions could delay spending.
"While the situation facing the world is critical, it is vital we keep our eye on the medium to long term target of a sustainable energy future," Nobuo Tanaka, the Paris-based agency's executive director, told reporters at the release of its annual World Energy Outlook report in London.
The Organization of the Petroleum Exporting Countries, which pumps around 40 percent of the world's oil, cut output by 1.5 million barrels per day from Nov 1 to counter a recent fall in the price of crude from a high of $147 in July to under $59 yesterday.
OPEC has also warned that crucial downstream investment - in refining and distribution - will be curtailed if the oil price is not maintained at a reasonable level.
The IEA has nearly doubled its forecast for the price of oil over the next twenty years, because of rising demand in the developing world as well as surging costs of production as oil needs to be sourced from more expensive offshore fields and state-run companies.
It hiked its forecast for the price of a barrel of oil in 2030 to just over US$200 in nominal terms, compared to its forecast last year of US$108 a barrel. Measured in constant dollars, it pegs oil at US$120 a barrel in 2030, up from last year's forecast of US$62.
Over 2008 to 2015, it predicts the price to average $100.
Tanaka said that "while market imbalances will feed instability, the era of cheap oil is over."
Fatih Birol, the IEA's chief economist, warned that even if growth in oil demand remained static in the years to 2030, production would need to increase by 45 million barrels per day, "which means bringing four new Saudi Arabia's on stream".
(China Daily 11/13/2008 page17)