Usually when you see phrases like “oil crunch in five years”, you assume that you’re being addressed by a peak-oiler who is about to go on to explain to you the composition of the canned food stash that he’s secured in his attic. So when you realise that you’re actually reading the FT, and the people using the phrase are the International Energy Agency, it’s easy to do a double-take. But there it is, in black and white (well, pink):
In its starkest warning yet on the world’s fuel outlook, the International Energy Agency said “oil looks extremely tight in five years time” and there are “prospects of even tighter natural gas markets at the turn of the decade”.
The IEA said that supply was falling faster than expected in mature areas, such as the North Sea or Mexico, while projects in new provinces such as the Russian Far East, faced long delays. Meanwhile consumption is accelerating on strong economic growth in emerging countries.
The problem is exacerbated by the fact that supply from non-members of the Organisation of the Petroleum Exporting Countries will increase at an annual pace of 1 per cent, or less than half the rate of the demand rise.
The widening gap between rising consumption and lagging non-Opec supply will force Opec to sharply increase its production in the next five years.
Lawrence Eagles, head of the IEA’s oil market division, told the Financial Times: “If we get to the point were there is insufficient supply, the only way to balance the market will be through higher prices and a drop in demand.
IEA’s gloomy pronouncement comes within a week of the UN Food and Agriculture Organisation forecast of food price increases of between 20 and 50 per cent over the next decade, thanks to biofuels, climate change, water scarcity and increased demand (see GlobalDashboard’s one pager on how scarcity trends intersect here).
All of which raises the rather pertinent question: Does anyone, at either national or global level, have a plan to manage all this – or indeed clarity over whose job it is to worry about such a cross-cutting trend?
P.S. If you’re now wondering what you should have stashed in the attic: help is at hand.