A leading international energy agency yesterday urged oil-producing countries to replenish crude oil inventories in light of a record oil price.

In unusually urgent tones, the International Energy Agency warned that demand for oil imports by China and India will almost quadruple by 2030 and could create a supply “crunch” as soon as 2015 if oil producers do not step up production, energy efficiency fails to improve and demand from the two countries is not dampened.
“At current prices the market is signaling that stocks need to be higher, something that is in the power of producers to address,” Nobuo Tanaka, executive director of the IEA, told journalists at a briefing in London. “Since this time last year, the world outlook has deteriorated. Demand is higher and supply worsening.”
Bolstered by speedy economic development and industrialization, energy demand from Asia has been one of the main contributors to higher oil prices. Over the last two years, China and India accounted for about 70 percent of the increase in energy demand and the world’s energy needs would increase 55 percent by 2030. Another reason for higher prices is investments not made by oil producers, including the Organization of the Petroleum Exporting Countries, the agency said.
Strong demand has helped push oil prices to a series of records in recent weeks. Crude oil rose 1 percent, to $97.62 a barrel on the New York Mercantile Exchange and futures climbed to $98.62, the highest intraday price since trading began in 1983. Prices are closing in on a record level, adjusted for inflation, of $101.70 a barrel in April 1980.
High economic growth in China and India could push oil prices to $159 a barrel by 2030, the agency said. Fatih Birol, the agency’s chief economist and the lead author of its flagship publication, The World Energy Outlook 2007, presented yesterday, said that while economic growth should be encouraged because it helps to meet increasing energy demand through fostering innovation, it needs to happen in tandem with policies for energy efficiency.
Birol called on the Chinese government to put standards and quotas in place that would allow the country to grow while slowing energy consumption and carbon emissions. Car sales in China, which overtook Japan last year and are expected to overtake the United States by 2015, contribute to rising oil demand and harm the environment and are an area where new policies could take effect, he said. “We’re not running out of energy or money, but we’re running out of time,” Birol said.
The agency said the immediate adoption of policies, including tougher efficiency standards for air conditioners and refrigerators in India and China, would result in China saving the amount of power produced by the enormous Three Gorges dam by 2020 and India profiting from a reduction of pollution.
The next decade is crucial for the stability of the global energy system, the agency said. Decisions made yesterday in China and India -- for example, whether to continue investment in coal-fired power plants or to adopt policies to tackle global warming -- will have worldwide consequences for decades.
China’s and India’s energy use is projected to double from 2005 to 2030. By 2030, the two countries will account for nearly half the increase in global demand. China is expected to overtake the United States as the world’s top carbon emitter this year and the largest energy consumer soon after 2010, the agency said. In India, where more than 400 million people have no access to electricity, energy demand is expected to more than double by 2030.
China and India argue that it is unfair to blame them for rising energy prices, and they have resisted calls to limit carbon emissions when their economies are trying to catch up with development levels in the West. Energy use per person in those countries remains much lower than in the industrial nations.
In its report, the energy agency recognized the legitimate aspirations of China and India to improve the lives of their people. It said, moreover, that solving energy problems is a global responsibility that demands action by all countries.
“The challenges are global so solutions are global,” Tanaka said. “The global energy system is on an increasingly unsustainable path. Policies can make a difference but for those to be achieved implementations need to start now.”
(Source: The New York Times)