The IEA now claims that developed countries have peaked in their usage of oil. Higher prices, concerns over the environment and the recession have stifled demand and much of it will never return.
How do I get a job doing this kind of analysis for 23 countries? I want the big bucks these guys make for a constant outpouring of headline grabbing analysis. They must have a dozen analysts sitting in a think tank straining for ideas for future topics. Unfortunately their average age must be 12.
Fatih Birol, the head of the IEA, was predicting the world would ramp up oil production to 130 mbpd by 2030 just a couple years ago. Don't worry, be happy! We are swimming in oil if only somebody would cough up $50 trillion over the next 20 years to find it.
Now less than five years later that prediction has declined to 100 mbpd and insiders at the IEA are leaking that the official estimate is that 90 mbpd will be next to impossible. So where does the IEA turn for its next prediction? Right, the developed world with all the money to buy big cars, has seen demand peak, never to return.
Mr Birol, please grab any newspaper from last this weekend and you will see that GM is ramping up production of gas guzzling SUVs and high performance sports cars and slowing production of "gas efficient economy cars." It seems that only 18 months ago U.S. consumers were paying over $4 for gasoline but they have forgotten that painful lesson and they are warming up to big cars once again. After a year of carpooling 4.8 kids in a cramped 4-cylinder they are yearning for the wide-open spaces of a Suburban or Tahoe once again. Ah, yes, what a short memory consumers have.
The IEA has evidently overlooked the opinions of U.S. soccer moms and the wide-open 8-lane highways in America. Maybe he has spent too much time in Europe where everyone drives a roller skate with a top and commutes to work on a six-foot wide ribbon of concrete with no shoulders.
Most of all I think the IEA is not counting on the U.S. birth rate, immigration rate, legal or otherwise, and the fact we are living longer every year. The average 65 yr old man today can expect to live to 85 before the odds start accelerating against him. My 90 yr old mother was still driving 100 miles a week in a SUV until four months ago. We live by our cars in America and yes, some live in them. The NRA has a saying; "They will get my gun when they pry it from my cold dead hands." Insert car and steering wheel in that sentence and you have the feelings for Americans and cars.
The U.S. population just ticked over 308,595,150 people while I was writing this commentary. According to the U.S. Census Bureau there is one birth every 8 seconds in the U.S. and one new immigrant every 37 seconds. After allowing for deaths there is a new person in the U.S. every 14-seconds. That is 6,171 people per day, 2,255,040 new people per year, 22.5 million per decade. I assume from the IEA comments they are all going to walk to work.
Mr Birol got some support from Tony Hayward, chief economist at BP, who said that demand may never return to growth in the U.S. and we will decline from here. What are these guys smoking?
According to the IEA the push for more efficient vehicles in developing markets could dampen emerging economy growth. Let's see, China is expected to go from 50 million vehicles today to 250 million by 2020 and how exactly is that going to dampen emerging economy demand?
They did find one willing listener. The head of Saudi Aramco, the Saudi Arabian oil company, told the participants in Davos that "there is too much rhetoric in the public domain about moving away from oil. The issue of peak oil has been pushed behind, there are plenty of resources out there." They have obviously got him panicked that demand is going to decline just after they finished spending a fortune to bump Saudi's production capacity to 12 mbpd. If electric cars really started to catch on Saudi Arabia would be in trouble.
What is that quote from the movie, "your ancestors rode camels, you ride a Mercedes but your grandkids will ride camels again." I seriously doubt that will happen in the next 50 years. Even as oil production begins to decline the increase in prices will buy them plenty of Hummers to prowl the nightspots with.
Even if the IEA is right about demand in the developed countries not reaching prior levels there will be more than enough demand from China and India to insure peak oil is a major global problem.
The biggest demand drop those of us in America will have to worry about is when Iran or North Korea launches a rocket with an electro magnetic pulse (EMP) bomb over the U.S. and fries every electrical device in the country. I do believe it will happen and the world won't have to worry about peak oil for several decades after that event.
American Thinker article
Heritage Foundation article