What the IEA Doesn't Want You to Know About Peak Oil

Includes: OIL, SPY, USO
by: Delta Lima

“We are facing a serious threat”

Dr. Fatih Birol, Chief-Economist of the International Energy Agency (the agency which advices OECD countries on oil, including the US) and “one of the most powerful men on earth” according to the British newspaper, The Guardian[1] has lately attracted extensive media attention.

Indeed, in a recent interview to the British newspaper, The Independent[2], Dr. Birol was reported to say that the world was heading for a catastrophic energy crunch that could cripple a global economic recovery.

The article added, “In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated”.

In fact, in 2008 the IEA conducted for the first time[3] a detailed field-by-field analysis of global oil production and its findings are bleak. Asked by a journalist on what the previous analysis relied on, the Chief-Economist of the IEA admitted, “it was mainly an assumption[4]. In the 2008 World Energy Outlook (the key document on oil used by OECD countries), they have analysed about 800 fields, which account for ¾ of global reserves and more than 2/3 of global oil production[5]. They come to the conclusion that decline rates are far higher than previously thought, between 6.7 and 8.6% a year[6]. As result, they now estimate that to maintain the current levels of oil production (about 85 MBD) by 2030 the world would need to develop and produce 45 MBD; as said by Dr. Fatih Birol, approximately four new Saudi-Arabias[7].

Simultaneously, they have analysed all the projects that are financially sanctioned in all the countries in the world (about 230) up to 2015. As it takes five to ten years to produce oil from a new field, they have a clear image of the coming situation. When they add all the projects together (if all of them see the light of the day – unlikely with the current credit crunch[8]-) they will bring about 25 millions barrels per day[9]. However, because of the important decline rates, the world will still be short of “at least” 12.5 MBD before 2015[10]. Asked by a journalist if this means Peak Oil, Dr. Birol answered, “We are facing a serious threat[11].

Nevertheless, things are never clear when it comes to the IEA and Peak Oil, especially with Dr. Birol.

“Misquoted by the journalist…”

On the 27th of August[12], David Strahan, a British journalist, asked the IEA press office confirmation that the IEA recognised Peak Oil would happen “in about 10 years” as reported by The Independent.

Amazingly, an IEA spokesman (initially) answered:

I spoke with Fatih who said he was misquoted by the journalist…The article incorrectly made it sound that the total oil production (including unconventional oil etc.) is going to peak at that time. Taking into consideration gains from unconventional oil, oil peak will be later than 2020, more around 2030...

The first obvious question anyone would ask is: if Dr. Birol really was misquoted, why didn’t he issue an official statement when the article was published?

The answer may well be that he wasn’t really misquoted at all.

Steve Connor, the journalist who interviewed Dr. Birol (also the Science Editor of The Independent) was not prepared to see his reputation and integrity attacked in such a manner.

Soon after Mr. Connor issued an official complaint (and reminded the IEA the interview was taped) the IEA spokesman, Henning Lohse, issued a rather different statement… This time Dr. Birol no longer argued he was “misquoted”.

Fatih Birol feels that the article was confusing. Concerning peak oil, his position is clear and has not changed since WEO 2008… Taking into consideration gains from unconventional oil, oil peak will be later than 2020, more around 2030….

To be sure, the Peak Oil sceptics, Daniel Yergin and Michael Lynch (who, by the way recently attacked Dr. Birol[13]) will be delighted to hear that!

In fact, just a few days ago Michael Lynch apologised to Dr. Birol for “lumping him in with the peak oil advocates”. As reported by Mr. Lynch, “he (Dr. Birol) informs me that the widely-cited Guardian interview[14] misrepresented his views”. Once again, the press seems to be unable to understand Dr. Birol.

So what does the IEA think of Peak Oil? Well, nobody seems to know.

“There is a pack of deceit and economy with the truth here…”

On the 26th of November 2008, I sent an interview request to Dr. Birol, in order to discuss how Peak Oil would affect International Relations (my degree’s dissertation topic). While he was first “delighted” to meet with me (as reported by his assistant), he then cancelled the meeting. Nevertheless, Dr. Birol asked me to meet one of his “senior colleagues” at the IEA, Olivier Rech.

On the 18th of December 2008, I met Mr. Rech at the IEA HQ in Paris.

Mr. Rech, who was a key contributor to the 2008 WEO, clearly recognised the reality and seriousness of the impending crisis (yes, Peak Oil is real and yes, ASPO is likely to be right). As an example, he declared that:

What we understand today by mobility, such as spending a weekend at 1000 km, maybe in 20 years, the height of exoticism will be to go on a weekend at 20km of distance[15].

During the conversation, Mr. Rech also mentioned the difficult topic of global population in a post-Peak Oil world:

(Dr. Colin) Campbell effectively says that agricultural production will collapse because fertilisers will run out, by a lack of fuel and that the variable of adjustment to the problem will be the global population. Frankly I don’t know. It is so cataclysmic that me, I, I reach my limits. I reach my intellectual limits on that.[16]

So while the British Government (and many others) declares that it "does not feel the need to hold contingency plans specifically for the eventuality of crude oil supplies peaking between now and 2020"[17], a senior energy expert at the IEA – the body that advices our governments on oil - who wrote part of the 2008 WEO, cannot rule out the death of a significant part of humankind in the coming decades.

While Mr. Rech asked me to mention that some of his answers did not commit the IEA, the fact that the Chief-Economist of the IEA asked me to meet with him[18], may indicate that his views are far from being isolated in the agency or at least far from being ignored by Dr. Birol. Well at least in private of course.

Similarly, the newspaper The Guardian reported that another “IEA official” who was at the Poznan conference with IEA’s Executive Director, Nobuo Tanaka, admitted that, “There's a real risk that this thing could collapse”[19].

“But after his speech he seemed to change his tune…”

And yet, Dr. Birol who seems to be particularly concerned about his career has become a master in playing something that could be described as a “double game” regarding Peak Oil. Depending on the moment (and most likely, the pressures he receives), he publicly admits or denies or admits or denies the seriousness of Peak Oil and its potential effects.

In June 2004 the BBC[20] supported this claim and gave additional information about who Dr. Birol really is.

In public, Mr Birol denied that supply would not be able to meet rising demand, especially from the buoyant economies in the USA, China and India. But after his speech he seemed to change his tune… When BBC News Online followed up by asking if this giant increase in production was actually possible rather than simply a desire he refused to answer. "You are from the press? This is not for you. This is not for the press."

Apparently, for Dr. Birol the (hard) truth is neither for the press nor for the public.

“It needs careful and persuasive exposure of agendas…”

I was also able to meet a former director at the IEA who used to be the boss of Dr. Birol and for him it is very clear, “we have entered the Peak Oil zone”[21]. When I asked him[22] how the IEA in the 2008 WEO (which is under the responsibility of Dr. Birol) could still say that “global oil production in total is not expected to peak before 2030”[23], while as previously mentioned in this article the IEA knows that oil production will decline before 2015, he answered:

I used to be Birol’s boss, I even promoted him… he has been at the IEA for over 12 years and is now at a key position. Why do you think so?

In fact, it is not in the interest of some IEA member states, in particular its most powerful member, namely the USA, that the agency provides an honest assessment of the situation. Admitting Peak Oil is real also means that you acknowledge our current way of life is about to (radically) change[24]. And not everyone wants the public to know that. Irresponsible, dishonest? Absolutely.

In The Independent, Dr. Birol also declared that, “Many governments now are more and more aware that at least the day of cheap and easy oil is over... (however) I'm not very optimistic about governments being aware of the difficulties we may face in the oil supply.”

Why would governments be aware of “the difficulties we may face in the oil supply” if Dr. Birol still argues (regardless of the facts) that global Peak Oil will happen “around 2030”?

Politicians who have short-term interests, namely elections to win, naturally prefer to support the optimists (few people like to hear the bad news, especially when there is no easy solution). So he should not wonder why most governments simply ignore the threat of Peak Oil. In fact, Dr. Birol who has been at the IEA for over a decade (and as reported to me, one of the strongest deniers of Peak Oil until 2006) holds an important share of responsibility for denying the imminence and seriousness of the situation. The IEA which was set up soon after the first oil shock to advice OECD countries had failed its mission.

Maybe one day politicians and mainstream media will finally start to investigate what is really going on in the energy sector (including the IEA).

The following analysis on the Peak Oil debate from Chris Holtom, the former head of British military intelligence, nowadays a strategic consultant to the oil & gas industry, gives valuable information:

There is a pack of deceit and economy with the truth here - some willful, some born of ignorance, or fear of "group-think" related to stock price or employment. It needs careful and persuasive exposure of agendas, motives and possible consequences... Peak Oil is a potential Black Swan event, where the consequences are so great that after it we spend most of our time justifying why we didn’t anticipate it… It is a global issue and global bodies need the clout and courage to address them.[25]

There is a parallel here with what happened with the financial crisis and the failure of regulative authorities to control the banking sector at that time. The same is happening now in the energy sector. By the time we realize this, the crisis will be real and… uncontrollable.

As the US Joint Forces Command concludes:

By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD… The implications for future conflict are ominous...[26]

[1] George Monbiot, "When will the oil run out?", (The Guardian, 15 December 2008),


[3] George Monbiot, "When will the oil run out?" (The Guardian, 15 December 2008), <www.guardian.co.uk/business/2008/dec/15/...;

[4] Ibid

[5] Olivier Rech interviewed by the author, (Paris: IEA HQ, 18 December 2008).

[6] John Kemp, "Oil industry running faster just to keep up?: John Kemp", (Reuters, 19 November 2008), <www.reuters.com/article/reutersComServic...;

[7] The Times, "World needs four new Saudi Arabias, warns IEA", (Times Online, 12 November 2008), <business.timesonline.co.uk/tol/business/...;

[8] Spencer Swartz, "OPEC Nations Delay Drilling Projects", (The Wall Street Journal, 10 February 2009), <online.wsj.com/article/SB123421390528464...;

[9] Fatih Birol interviewed by Andrew Evans, "Fatih Birol of the IEA talks the talk about peak oil", (Aceditor, January 2008), <www.youtube.com/watch?v=BhXZzNaVLJw&...;

[10] Ibid

[11] Ibid

[15] Interview with the author, (Paris: IEA HQ, 18 December 2008),

[16] Ibid

[17] George Monbiot, "We spend millions on smallpox, but nothing on this far greater threat", (The Guardian, 14 April 2009), <www.guardian.co.uk/commentisfree/2009/ap...;

[18] Email conversation with Sandra Mooney (Dr. Birol’s Assistant), “he (Dr. Birol) would like you to meet with one of his senior colleagues here in the Office of the Chief Economist – Mr. Olivier Rech. ”, 12 December 2008

[21] Email discussion with the author (under the Chatham House Rule), 4 November 2008

[22] Interview with the author (under the Chatham House Rule), 18 February 2009

[25] Email discussion with the author, 14 May 2009.

[26] USJFCOM, "Joint Operating Environment 2008", (Joint Forces Command, November 2008), page 17 and 19, <www.jfcom.mil/newslink/storyarchive/2008...;