IEA : Oil 'extremely tight in 5 years'

When scientists say oil production could peak soon, the reports are met with skepticism, especially in industry. When economists talk, industry pays more attention. That makes Monday's [9 Jul 2007] forecast from the International Energy Agency (IEA) significant.

A handful of scientists have been saying for years that the peak is not just inevitable but will come sooner rather than later. Another handful disagreed. Earlier this year, a Swedish researcher used a new method of estimating oil reserves and potential new discoveries to conclude that oil could peak as early as next year.

Now, the IEA, which advises 26 industrialized nations, says "oil looks extremely tight in five years time." What exactly does tight mean? It means, in very simple supply-and-demand terms, that the sudden and rapidly growing demand (most noticeably from China and India) will soon outstrip the supply (which everyone who admits the dinosaurs are gone would agree is finite). The IEA notes the acceleration in demand, which is no secret, but it also points out that supply from mature regions is falling faster than expected.

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