Duncan’s Economic Blog

Oil

Posted in Uncategorized by duncanseconomicblog on November 10, 2009

I’m still very busy. But I’m nearing completion of my next piece on capital/banks/interest rates. I bet you’re all thrilled.

In the meantime, this is causing me some concern:

 LONDON (Reuters) – The world is closer to a peak in oil supply than International Energy Agency estimates admit, UK newspaper The Guardian reported in its Tuesday edition, citing an unidentified “whistleblower” at the IEA.

The IEA, which advises 28 industrialized countries on energy policy, is scheduled to release its World Energy Outlook on Tuesday. It 2008 Outlook forecasts world oil supply will rise to 106 million barrels per day in 2030.

“Many inside the organization believe that maintaining oil supplies at even 90 million to 95 million barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further,” the Guardian quoted the IEA source as saying.

Fatih Birol, the IEA’s chief economist, could not immediately be reached by Reuters for comment on the Guardian article, which appeared on the newspaper’s front page.

While the Paris-based IEA has repeatedly warned that a lack of investment could lead to a strain on supply, it maintains that there is enough oil in the ground.

Its 2008 World Energy Outlook said global oil output was “not expected to peak before 2030.”

The peak oil theory — that supply has reached or will soon reach a high point and then fall — has long been confined to the fringes of informed opinion within the industry.

I’ve blogged on Peak Oil before. I don’t feel well qualified enough to judge the likelihood but I do think it would represent a strange combination of inflation & deflation.

 We would in effect experience the worst of both deflation and inflation. Falling goods and services prices driving down corporate profits and leading to increasing unemployment but rising fuel and food prices which would hit the poorest the hardest.

One Response

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  1. dannyboy said, on November 10, 2009 at 1:11 pm

    All of which means we should be thinking about economic reforms which don’t depend on growth I would say.


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