Economist experiences “earthquake”
As oil hits $96, the news keeps getting better and better at the Oil and Money conference in London — better, that is, in terms of a growing recognition that oil supplies are liable to continue getting tighter and tighter.
As we noted yesterday, a former poobah at Saudi Aramco said openly that many countries overstate their reserves. And now the top economist at the International Energy Agency says he's experienced a revelation — or in his words, "an earthquake."
The rapidly growing appetite for fossil fuels in China and India is likely to help keep oil prices high for the foreseeable future, threatening a global economic slowdown, a top energy expert said on Wednesday.
The unusually stark warning by Fatih Birol, chief economist of the International Energy Agency, about the effect of Asia’s emerging giants comes as the agency prepares to issue its influential annual report next week, which will focus on China and India.
In preparing the report, Mr. Birol said he had experienced “an earthquake” in his thinking.
“China plus India are going to dominate growth in the oil markets,” Mr. Birol said during an interview at an oil industry conference. Over the last 18 months, he noted, more than two-thirds of the growth in global oil demand came from China and India alone.
I know, I know. China and India consuming more and more fossil fuel isn't exactly breaking news to you and me. But if mainstream folk like Mr. Birol are waking up to the reality, I'll take it as an encouraging sign. He even came up with a nifty way of looking at things that I hadn't thought of before:
Demand for oil in China, he added, would eventually equal the entire supply from Saudi Arabia. Partly as a result, the annual report will predict that oil prices could hit levels much higher than once thought possible…
Mr. Birol's remarks come four months after the IEA's annual medium-term forecast took a sharply pessimistic turn from years gone by. It forecast a "supply crunch" after 2010, with OPEC's spare production capacity more or less gone by 2012.
None of this adds up to good news for Big Oil, though — as we see with Exxon Mobil's third-quarter numbers, record revenue notwithstanding. In a world of scarce supplies snapped up by government entities, the real action in the energy sector is elsewhere, as Strategic Investment editor Dan Amoss has outlined in a special report.
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Jay Leno gave Ron Paul 5 minutes the other night, following Tom Cruse. Ron did a fine job until Jay asked him about all the good services Govt. provides such as highways, etc. Ron hemmed and hawed on that one, although many in the audience sure did like him. He needs to get a lot more articulate on what he’d propose as options. What do you think?
Comment on November 1, 2007 @ 2:37 pm
Ron Paul is far too pleasant a fellow to be running for US President.
At this stage in the issues debate, it’s not exactly prudent to offer solutions, given the amount of resources and media bias against him.
Highways are paid for by the gasoline tax, and toll roads are also an option.
The fundamental problem , however, is that government is nothing more than an aggregated response to our individual derelictions.
As long as an individual can beg for assistance while screaming for freedom, and ignore the contradiction, expect government to prosper.
Comment on November 1, 2007 @ 3:37 pm
Yeah, especially on Social Security, Ron Paul seemed to be backtracking and contradicting himself. In a lot of cases, the reason government started providing a service in the first place is that the private sector couldn’t do so profitably, yet it needed to be done. In other cases, essential services have been contracted out that proably should still be controlled by the government so that the country can’t be held hostage to the whims of the marketplace. Ron Paul is an honest man who brings to the debate many points that the other candidates are missing, but he hasn’t thought through clearly what will happen if you start dismantling what is left of the government safety net. The country simply has too many people to function at all smoothly without a strong central government. But he makes good points about currency, and is absolutely right about getting out of wars of conquest. Unfortunately, the USA is now so many trillions in debt that it will require global currency reform to ever get us out of the hole.
Comment on November 1, 2007 @ 3:55 pm
Ron Paul is much too nice to have looked in the dank holes that us Peakoilers and conspiracists have been crawling around in.
He isn’t going to get elected, and nobody else has a clue, and if they do, they aren’t telling the truth about it (see “Iran-contra and Arkansas”).
The ones that are qualified can’t get elected, and the ones that are shouldn’t be tortured. It’s simply insane.
If you want less government, then do things yourself. If we want a sustainable human species, we have to build upon something other than fossil fuels and overfishing.
If we let China become dependent upon oil, and we work toward cooperative sustainability, then we would be ahead of them, even if our economy is left in the mud. Somehow, though, I think they are using the oil simply to make our trinkets while they build dams, solar panels, windmills, and go to the moon looking for Helium3…..see a pattern emerging here, Scully?
It’s all lies anyway. Grow your own food, get to know your neighbors. Keep your powder dry and buy a raincoat, ’cause the shitstorm is about to hit the Bernanke helicopter fan.
Comment on November 2, 2007 @ 3:19 pm
“Grow your own food, get to know your neighbours.”
i agree. very simple. Just smash you tv into pieces, and you’re home free.
-Food
-Neighbours
-No TV
Comment on November 3, 2007 @ 8:38 pm
The Daily Wealth newsletters come thru my computer having a lot of funny “?” marks in nearly every sentence. Why is this? It’s annoying. Good newsletters, bad punctuation.
Comment on November 5, 2007 @ 9:40 pm