The annual IEA WEO (International Energy Agency World Energy Outlook) report is out. This is a big deal in the energy world and comes at a very interesting time. Today the oil price has hit a four year low. Some people think we are entering a new era of new oil prices due to unconventional oil. Despite all this the IEA WEO 2014 report is far more pessimistic than you might think.
The IEA is the rich world’s energy watchdog, it was formed after the first oil shock in 1973 to advise Western Governments on energy matters. It has had a variable relationship with the idea of peak oil a good summary of which can be seen here. In 2005 the US government Hirsch report came out, this was the first report to take peak oil seriously and raised its profile as an idea more than it had been for 30 years. In the IEA WEO 2005 report though everything was rosy and it wasn’t really until the IEA WEO 2010 report that peak oil got a mention, of course it was not called that. The exact phraseology was far more subtle, we would not want to panic everyone;
“Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006, while production of natural gas liquids (NGLs) and unconventional oil grows strongly.”
By 2012 everything in the oil garden was once again rosy. This IEA WEO report made big news, unconventional oil would fill the gap and peak oil was dead (our first ever post!).
The IEA WEO 2014 is again despite a background of falling oil prices far more pessimistic.
- The report has its usual warnings on climate change (the IEA are not climate sceptics) and on phasing out fossil fuel subsidies (worldwide these are huge). It remains to be seen if anyone takes nay notice of this. I’m praying for the big meeting in Paris next year but the news from the Asian summit over the last few days has been encouraging.
- The IEA WEO 2014 report sees an energy system under “stress”. They think that low oil prices will lead to slump in exploration and new production and therefore a supply crunch. They think energy demand will climb another 37% over the next 25 years. This will be very difficult probably impossible for our fossil fuel supplies to meet (in my view).
- Whilst everyone rubbished peak oil in 2012 there were two things they missed in the IEA WEO report from that year. The first was that unconventional oil would not last long in the US and the second that we would still be very dependent on the middle East. Both these points are shown in the following graph from this years report.
- US shale oil will go into decline in four years time, we need a another 14mbd of oil and oil equivalent to meet global demand and all that shortfall is mysteriously going to come from the middle east (no I don’t think so either).
- The IEA think there will be more nuclear but that it will provide a far smaller & of global energy and recognise public concerns over its safety. A massive 50% of all new energy investment will be in renewables.
This latest IEA WEO report shows peak oil is not dead but at best has been delayed a few years and we still face significant energy supply challenges. All this will have profound implications for all of us but also for Christians and the church and its a bit surprising that we don’t think about it a bit more.