Friday, May 30, 2008
IEA Discovers Supply
"The decision to rigorously survey supply--instead of just demand, as in the past--reflects an increasing fear within the agency [IEA] and elsewhere that oil-producing regions aren't on track to meet future needs. ... The IEA, employing a team of 25 analysts, is trying to shed light on some of the industry's best-kept secrets by assessing the health of major oil fields scattered from Venezeula and Mexico to Saudi Arabia, Kuwait and Iraq. The fields supply over two-thirds of daily world oil prodution. ... But the direction of the IEA's work echoes the gathering supply-side gloom articulated by some Big Oil executives in recent months. ... Any gap, it was assumed, would then be met by big OPEC producers such as Saudi Arabia, Iran or Kuwait. ... In November, [the IEA] said its analysis of projects known to be in the works suggested that the world could face a shortfall by 2015 of as much as 12.5 million barrels a day, unless there was a sharp drop in expected demand. ... 'This is very important, because the IEA is treated as the world's only serious guardian of energy data and forecasts,' says Edward Morse, chief energy economist at Lehman Brothers. ... The big OPEC producers have been raking in record profits, creating a disincentive to sink more billions into increased oil production. ... 'The IEA is always conflicted by political pressures,' says Chris Skrebowski, a London-based oil analyst", WSJ, 22 May 2008.
All such "guardians" are subject to political pressures. That said, a 12.5 million barrel a day oil production "shortfall" could double oil prices.