The International Energy Agency (IEA) released new findings Tuesday April 13 that global oil demand will reach a record high level in 2010, as the world economy recovers and developing nations’ demand for oil grows to new heights. IEA forecasts that average annual world oil demand will have rebounded 2% from 84.9 million barrels per day (mb/d) in 2009 to 86.6 mb/d in 2010. Susan Lyon, Special Assistant on CAP’s Energy Opportunity team, has the story.
In its April 13 Oil Market Report, a monthly update on world oil market trends, IEA forecasts world oil demand growth this year at 1.67 mb/d, up by 100,000 bpd from its previous forecast. Accordingly, the agency finds that “crude oil futures hit 18-month highs in early April, with expectations for an accelerating economic recovery.” Since the last oil market report, global oil demand has been revised up by 30,000 barrels per day (b/d).
Ultimately, things might turn messy for producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic recovery while prompting resurgent non-oil and non-OPEC supply investment.
On the supply side, due to lower OPEC output, global oil supply fell by 220,000 b/d in March as well. The new data also reveals a new trend in global oil refinery throughput: “While China, India and Russia all posted record highs in February, European throughputs fell to their lowest level in 17 years.”
IEA’s report comes on the heels of last week’s 2010 Joint Operating Environment (JOE) report by the U.S. Joint Forces Command (USJFCOM) lays out the energy crunch that lies before us and its likely consequences. The projected growth of overall energy demand for decades to come, led by oil and coal, is alarming to the U.S. armed forces:
By the 2030s, [energy] demand is estimated to be nearly 50% greater than today. To meet that demand, even assuming more effective conservation measures, the world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.
Without tremendous energy efficiency efforts and a massive shift toward renewable energy, they note that the U.S. and world economies may suffer production bottlenecks as well as regional instability due to resource scarcity and price volatility.
Furthermore, the JOE (!) also pinpoints climate change as a top 10 security issue: “one of the ten trends most likely to impact the Joint Force.” Previously, the Department of Defense’s Quadrennial Defense Review argued that climate change is a “destabilizing agent” and the Center for Naval Analysis convened a board of military officials who concluded in 2007 that climate change is a “threat multiplier.”
To face the dual challenges of energy and climate, we must pass a comprehensive clean energy and climate legislation that will reduce our dangerous dependence on foreign oil while also putting a limit on carbon pollution. The IEA reminds us that the “return of economic growth” is delicate and requires reducing our vulnerability to oil price spikes and supply disruptions.