Global Witness, an international NGO, has a new report out predicting a major oil "supply crunch" in the next five years that will make oil unaffordable for developing countries. The group predicts that there will be a gap of 7 million barrels per day between supply and demand.
This seems overly alarmist, because there's still a lot of excess capacity in the system. Saudi Arabia alone has 4 million barrels of excess capacity: The kingdom could produce 12 million barrels per day, but it only pumps 8. Iraq is planning to triple its production capacity at Rumaila, from one million barrels to 2.8 million. And so on.
In the long run, yes, we're going to run out of oil, and there are good short-term reasons to reduce consumption. But alarmist "we're running out of oil NOW!" rhetoric isn't helpful.
Dear Rupert, with all due respect, I suggest you read our report a little more carefully. First, we did not put a timeline on an oil crunch - and the projection of a 7m bpd supply demand-gap by 2015 was not ours, but that of the International Energy Agency in November 2008. There are four underlying fundamental problems with oil supply: Declining discoveries; shrinking output from existing fields; the demand trend is up; and there are insufficient new projects coming onstream. Like many, you also appear to have made a gigantic leap, concluding that we suggest oil is running out. This is not correct: what we are saying is that we are nearing the point when it will not be possible to add significant new volumes of oil onto the market, that increased demand cannot soon be catered for, and that after this point (we do not specify when), overall volumes of oil available to the market will start to decline. Yes Saudi has some spare capacity, and so does Iraq, but Iraq is far from producing and we question how long Saudi can off-set an annual global decline rate of some 3.7 million barrels per day. If you read our report carefully, you will see that these are compelling reasons for Governments to take this issue seriously and as a matter of highest priority - instead of the current "heads in the sand" approach. Many thanks for raising these issues. I hope this helps clarify what we are saying and if you wish to discuss the matter further, please do email me on: staylor@globalwitness.org Best wishes for now, Simon Taylor, Director, Global Witness.
ReplyDelete