International Energy Association: Forced to Eat Their Optimistic Data on Future Oil Supply?

Nov.11.09 | About: The United (USL)

Wayne Thiebaud CakesThe Guardian newspaper dropped a small bomb on the International Energy Agency (IEA) Monday night, on the eve of the IEA’s annual release of their signature product: The World Energy Outlook. According to the British newspaper, at least one if not two whistleblowers within the agency were claiming that the IEA’s record of chronic optimism on future oil supply had been disingenuous at best, and moreover, that this positioning had been influenced over the years by pressure from the US. In journalistic terms, the story was beautifully timed. Because yesterday, media on both sides of the Atlantic from the Financial Times to Reuters, to CNN and even CNBC, produced at least as much coverage on the controversy as the IEA’s scheduled data release. This effectively buried the Paris agency under a mound of accusation.

Let’s go back a few months and find some of the early signals, however, indicating this story was likely overdue. In August, a journalist at a separate British newspaper, The Independent, had conducted a long interview with the IEA’s chief Fatih Birol. In that interview, Dr. Birol made a number of very clear statements about the rather dire prospects for any future growth in world oil supply. This was unsurprising, in some respects, because the IEA had already asserted, in World Energy Outlook 2008, that existing oil fields were declining by at least 4.00% if not 6.00% per annum, and that to actually lift global oil production would require not billions, but trillions, of investment.

But something odd happened in the weeks that followed this interview. First, Dr. Birol was interviewed by another journalist, this time David Strahan. In this subsequent interview, Birol claimed he’d either been misunderstood, or misquoted, by the Independent’s journalist–Steve Connor–who had reported that Birol was calling for “peak oil in about ten years.” The dispute appears to have turned on the issue of conventional oil vs all liquids (which includes natural gas liquids). Was Birol talking about just crude oil with the Independent’s journalist? Or was that interview about all liquids, which includes biofuels? Regardless, the confusion conformed to a pattern at IEA in which conclusions stated in reports and publications were hedged in public statements, or vice-versa.

Let’s also recall that the forecasting record of both the IEA in Paris and the EIA in Washington has been abysmal this decade. The actual growth of global crude oil supply compared to their forecasts has been so far off the mark, that each agency probably shouldn’t have even bothered to produce forecasts. But what’s particularly bizarre in today’s IEA World Energy Outlook 2009 report is that IEA maintains their forecast of a peak in global oil supply around 2030, but now suggests Non-OPEC supply will peak next year. Sorry, you can’t have 60% of world supply peaking in 2010, and then a final global peak 20 years from now. Besides, Non-OPEC peaked five year ago, and is currently on care and maintenance.

Non-OPEC Crude Oil Supply

The President of ASPO International, Kjell Aleklett, also posted yesterday at his website on his own attempts to force greater transparency at IEA Paris through the lever of his country, Sweden, and also through the organizational OECD structure, which funds the IEA. It would appear that the IEA has quite a lot to answer for. At the very least its own vacillations between its printed assertions, buried deep in its reports, and its public statements needs to be cleaned up. Secondly, the Paris agency produces a number of reports that run as much as 500 EUR, so it’s likely that some users may think twice before paying those kinds of sums if the information and conclusions have become politicized.

Finally, the IEA is a taxpayer supported group via the OECD, and it would be justified for the electorates in OECD countries to examine IEA’s funding, and to question to what extent country-by-country energy and transport policies are reliant on politicized IEA data. Today, Wednesday 11 November, Dr. Birol will field questions via the FT which is taking questions up until Noon GMT. Let’s see how the IEA handles this issue.

Photo: Wayne Thiebaud, Cakes, 1963. National Gallery of Art, Washington.
Graphic: Rembrandt Koppelaar, Non-OPEC Crude Oil Production, via The Oil Drum and Peak Oil Netherlands.