IEA warns of impending oil, gas shortage

The International Energy Agency warned July 9 of a global oil and gas crunch due to unforeseen demand and inadequate supply from OPEC and other suppliers.

“Not only does oil look extremely tight in five years time, but this coincides with the prospect of even tighter natural gas markets at the turn of the decade,” the energy security watchdog for the 26-nation Organization for Economic Cooperation and Development said in an oil market report.

The Paris-based agency forecasts escalating global growth will cause spare capacity from the Organization of Petroleum Exporting Countries to fall to “uncomfortably low levels” — and non-OPEC countries will not pick up the slack. Supply increases from non-OPEC oil producers will begin to recede in 2009, the report says.

Assumptions are based on a 2.2 percent annual increase in global oil demand, powered by economic growth, which the agency forecasts at 4.5 percent per year.

While the agency does not forecast oil prices, the scenario points to higher prices at the gas pump.

“The IEA has a political role as well as an economic role: the defense of the consumer,” said Theirry Lefrancois, an analyst with Natixis in Paris. “They are saying to OPEC countries, ‘Look at where petrol consumption is going to be in 2012, so you will have to increase your production capacities faster than you planned.’”

“If demand increases more than 2 percent a year we will have a major petrol crisis,” he said. Oil prices reached nearly one-year highs the week of July 2, rising 3 percent from the June 29 settlement price of $70.68. That was the front-month contract’s first close above $70 since August 2006.

—The Associated Press