Brace for another energy crisis. A new authoritative assessment forecasts sharply higher demand that will raise prices and increase reliance on the Organization of the Petroleum Exporting Countries (OPEC) and unstable regions for oil supplies. While some experts dismiss the analysis as alarmist, we need to prepare for a world characterized by increasing energy scarcity — and think creatively about how to do so.
In its most recent report, the International Energy Agency (IEA) projects that global oil demand will grow on average by 1.9 million barrels a day, or 2.2 percent, a year to reach 95.8 million barrels a day by 2012. In its last report, it anticipated growth in energy demand of just 2 percent a year. About two-thirds of the increase will come from developing economies in Asia and the Middle East. Chinese demand for oil will total nearly 10 million barrels a day in 2012 — more than 10 percent of the total — creating a considerable shortfall given domestic production of only 3.9 million barrels a day.
Unfortunately, there is little indication that supply will keep pace. Older sources of supply, such as the North Sea and Mexico, have matured and the oil they produce is increasingly expensive. The IEA forecasts that British oil production will fall from its current level of 1.7 million barrels a day to 1 million b/d by 2012.