12 November 2009

Panic Warning as Oil Supplies Run Low

Excerpt from the Sydney Morning Herald, 11 November 2009

'The world is much closer to running out of oil than official estimates admit, says a whistleblower at the International Energy Agency who charges it has been underplaying a looming shortage for fear of triggering panic buying.

The senior official says the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the prospects of new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply - to be published yesterday - which is used by many governments to help guide their wider energy and climate change policies.

This year's report is believed to repeat the prediction in last year's that oil production can be raised from its present 83 million barrels a day to 105 million barrels. External critics have argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Now the ''peak oil'' theory is gaining support at the heart of the global energy establishment.

''The IEA in 2005 was predicting oil supplies could rise as high as 120 million barrels a day by 2030 although it was forced to reduce this gradually to 116 million and then 105 million last year,'' said the agency source, who was unwilling to be identified for fear of industry reprisals.

''The 120 million figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this.

''Many inside the organisation 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. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources.''

A second senior agency source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was ''imperative not to anger the Americans'' but the fact was that there was not as much oil in the world as had been admitted. ''We have [already] entered the 'peak oil' zone. I think that the situation is really bad,'' he added.

The International Energy Agency acknowledges the importance of its own figures, boasting on its website: ''The IEA governments and industry from all across the globe have come to rely on the World Energy Outlook to provide a consistent basis on which they can formulate policies and design business plans.''

The agency said on Monday that peak oil critics had often wrongly questioned its figures.

The agency was established in 1974 after the oil crisis in an attempt to try to safeguard energy supplies to the West...'

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