[Peakoil] Oil Monitor to Slash Estimate Of World's Supply of Crude

[Antony Barry]

Oil Monitor to Slash Estimate Of World's Supply of Crude
Neil King Jr. and Peter Fritsch, Wall Street Journal

The world's premier energy monitor is preparing a sharp downward  
revision of its oil-supply forecast, a shift that reflects deepening  
pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of a  
large study of the condition of world's top oil fields. Its findings  
won't be released until November, but the bottom line is already  
clear: Future crude-oil supplies could be far tighter than previously  
thought.

The IEA has predicted for several years that crude-oil supplies will  
arc gently upward to keep pace with rising demand, topping 116  
million barrels ...

The decision to rigorously survey supply — instead of just demand, as  
in the past — reflects an increasing fear within the agency and  
elsewhere that oil-producing regions aren't on track to meet future  
needs.

....The IEA's pessimism over future supplies has been building for  
some time. Last summer, the agency warned that OPEC's spare capacity  
could shrink "to minimal levels by 2012." In November, it said its  
analysis of projects known to be in the works suggested that the  
world could face a shortfall by 2015 of as much as 12.5 million  
barrels a day, unless there was a sharp drop in expected demand. The  
current IEA work aims to tally the range of investments and projects  
under way to boost production from the fields in question to get a  
clearer sense of what to expect in production flows.

"This is very important, because the IEA is treated as the world's  
only serious independent guardian of energy data and forecasts," says  
Edward Morse, chief energy economist at Lehman Brothers. Examining  
the state of the world's big oil fields could prod their owners into  
unaccustomed transparency, he says.
(21 May 2008)
Comments by Kevin Drum at Washington Monthly:

The IEA's concern is with both the absolute condition of the world's  
oil fields and the amount of investment being made in new projects.  
Either way, though, a shortfall of 12.5 million barrels is huge. If  
that's an accurate assessment, prices are going to have to double  
another couple of times to bring demand into line with supply. $500  
oil, anyone?

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