Are we moving towards a new oil crisis?

Energy Matters0


The world is aware that the production of the existing oil wells is decaying and that new discoveries are more scarce and more expensive. Some experts consider that global oil production may have peaked at 94 million barrels a day [sic – the correct figure would be arround 84 Mb/d]. The current economic crisis can make the situation worse. The lower prices that we are enjoying now can be in fact bad news. At this price oil producers have been forced to postpone many necessary investments in new production capacity. These investments take decades to be accomplished. In consequence, if the current economic crisis finished and demand recovers we could be facing huge shortage of supplies that can lead to extremely high prices.

How high? According to the Secretary General of the International Energy Agency (IEA), Nabuo Tanaka, oil prices could go up to as much as 200$ a barrel in the next 4 years. A quick look back on the situation of last year when prices were at a mere 147$ a barrel maybe gives an idea of what the consequences may be if the prices goes a 25% higher.

The current relatively low oil prices give a respite to prepare for the coming new oil crisis. We have to reduce our dependency in all those areas in which black gold is not indispensable, such as heating, or electricity production. For those areas which will have to continue to depend on it, like transport, we need to accelerate the research for alternatives, like biofuels, electric cars or hydrogen. And in all sectors, we have to accelerate our efficiency being aware that every barrel of oil that we are using is one of the last.

It is difficult to forecast when the next oil crisis is going to come. As Nobel Price Niels Bohr once put it “prediction is very difficult, particularly about the future”. But one thing is certain, one day we are going to run out of oil, and to prepare for that day we may be running out of time.

There isn’t much to add to these lines, for anyone reading this post likely agrees fully with them.

Taking the opportunity, it may be perhaps time to reflect on this Commissioner’s term. The Commission took office with oil prices below 40$ and saw them climbing above 140$, dealt with protests from professionals dependent on oil products: hauliers, fishermen, farmers. He leaves office during the worst economic recession since at least 1980. While during the first half of its term both the Commission and the Commissioner were reluctant to accept the hypothesis of serious Energy supply problems, they eventually aknowledged the situation.

First with the setting of the 20-20-20 goals but especially with the second Strategic Energy Review, the Commission showed that it understood (even if partially) that Europe’s energy entitlement is at risk. Acknowledging the Union’s unsustainable dependence on imported Gas and the present importance of its Nuclear park, were two relevant steps. To that adds some interesting initiatives like the Mediterranean Energy Ring or the Solidarity Plan. But the most positive outcome to this Commissioner’s term ended up being the commitment to Energy Efficiency – the policy that can have most impact over the short term.

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