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Even The Iea's Getting Gloomy

In The Washington Post today, Steven Mufson reports that plenty of experts disagree about why, exactly, oil prices have rocketed out of orbit lately. Oil executives blame speculators. Speculators say oil companies are running out of oil. Congress says OPEC's at fault. OPEC's pointing the finger at U.S. consumption habits. And everyone's united in thinking that China's always-unslaked thirst for oil remains a major culprit. But here's more fodder for the peak-oil crowd: Today's Wall Street Journal sends word that even the International Energy Agency is now wondering if maybe supply won't be able to keep up with demand, after all. That's big news, seeing as how the IEA has, historically, offered a fairly rosy view of future oil supplies:

For several years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently. Now, the agency is worried that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day over the next two decades.

The decision to rigorously survey supply--instead of just demand, as in the past--reflects an increasing fear within the agency and elsewhere that oil-producing regions aren't on track to meet future needs. ...

[T]he direction of the IEA's work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. A growing number of people in the industry are endorsing a version of the "peak-oil" theory: that oil production will plateau in coming years, as suppliers fail to replace depleted fields with enough fresh ones to boost overall output. All of that has prompted numerous upward revisions to long-term oil-price forecasts on Wall Street.

Of course, getting an accurate read of even the biggest oil fields is extremely difficult to do, but, if this is true, it means countries are going to have to start taking a much harder look at taming demand. So far, that's not happening. While the United States has made very little effort to change its gas-guzzling ways, other countries have been actively subsidizing consumption: As Mufson notes, India is handing out more than $20 billion in fuel subsidies this year, while Lebanon, Mexico, Peru, Ukraine, and the Philippines are all slashing taxes and import fees to reduce the price of gas and avoid having to make more sweeping structural changes. That might ease the pain for awhile. Certainly not for very long.

--Bradford Plumer