[Peakoil] IEA Oil Peak calculations

[Adrian Whitehead]

While researching for the Conservation Council submission I came across this
interesting article 

The below paragraph (4th) and the related commentary I found most
interesting.

The methodology of the IEA for oil and oil price prediction was revealed in
the 2002 edition of WEO, page 95: "The oil supply projections of this
Outlook are derived from aggregated projections of oil demand….Opec
conventional oil production is assumed to fill the gap." 

http://www.energybulletin.net/11701.html

Adrian Whitehead
Water & Climate Campaigner
Conservation Council of the SE Region and Canberra
P: 6247 7808
F: 6248 5343
M: 0403 735 118



Published on 26 Nov 2005 by rechsteiner-basel.ch. Archived on 15 Dec 2005.
IEA: Stupid, Manipulative or Corrupt?

by Rudolf Rechsteiner, MP Switzerland
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When Parliaments decide on energy policy, they normally start with proposals
from the government. Governments like to swim in the mainstream – and they
get information and advice from so called experts of organizations such as
the International Energy Agency (IEA) or the International Atomic Energy
Agency (IAEA).

But up to now you barely find an international body who is in favour of
renewables. Why is this so?

The International Energy Agency IEA is a world champion in wrong
predictions, and their scenarios do not fit reality. Let’s take a closer
look at the World Energy Outlook (WEO), a bi-annual publication of IEA:

The methodology of the IEA for oil and oil price prediction was revealed in
the 2002 edition of WEO, page 95: "The oil supply projections of this
Outlook are derived from aggregated projections of oil demand….Opec
conventional oil production is assumed to fill the gap."

In the 2005 WEO the methodology was slightly modified,leading to almost
identical results, though. The idea of IEA still is that you find any amount
of oil in the Middle East, dependent only on investment cost, which will
need to rise to $17 trillion from 2004-2030.

One could take this to mean that the necessary high investments would lead
to higher prices in the oil sector. But not so in the IEA perspective.
Despite high investments, oil prices are expected to follow a deep fall,
soon, and to stay low for decades — so we are told in the 2005 outlook: Oil
at $35 a barrrel and gas at $6 per MBtu.

But how much of this is factual? Despite a steep rise of oil prices, the IEA
oil and renewables projections in 2005 are almost the same as in former
years. The IEA omits the crucial questions:

• How much will the prices rise in case that oil has peaked and you will not
find more than now or maybe less?
• How much must they rise to stabilize or destruct demand?
• What efficiency technologies will emerge if oil rises above $100 as
predicted in a Goldman Sachs report?
• And what renewable technology will be a good bargain with such prices?

Prices are different from what IEA reports. Oil is around $60 a barrel and
natural gas tends to follow oil, as can be seen every day in the US and in
Europe. The IEA reports are similar to the Soviet planning fulfillment
reports, and this reminds me the famous sentence by Michail Gorbatchev: “The
numbers were always good".

Yes IEA numbers sound good, but it is fantasy! IEA is making up things which
do not exist, and like in the Soviet Union, people might starve if they do
not act, investing in efficiency and renewables for example. IEA is totally
unwilling to learn, to give transparency or to adopt tested methods of oil
reserve and price assumptions. The objective of this wrong reserve reporting
and wrong price prediction is obvious:
• Parliaments and investors should be distracted from renewables as long as
possible.
• The supposed low (and stable) oil and gas prices, and prices not corrected
by externalities, renewables should stay in the cost trap for ever, they
cannot advance and will not get cheaper than conventional energies.
• Only wind power in some best sites might be competitive with gas, this is
the IEA message.

Fortunately – and this is the second good news – IEA is not only plain wrong
on fossil fuel prices, but on renewables too. Let me show this for the case
of wind power...

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