By 2012 Oil Production Is Expected to Fall Short Of Global Demand

IEA Forecast Underlines Oil, Gas Supply Worries - WSJ.com
By 2012, Production Is Expected to Fall Short Of Global Demand

By BHUSHAN BAHREE
July 10, 2007; Page A12

The industrialized world's energy watchdog added to rising concerns in some quarters that oil and natural gas production won't keep up with the world's growing thirst for energy in coming years, highlighting worries over supplies and prices.

The Paris-based International Energy Agency, which monitors energy markets on behalf of the world's 26 most-advanced economies, yesterday released its annual medium-term forecast, projecting conditions through 2012. The agency expects oil supply to be tighter in coming years than it had forecast, with little prospect of relief unless world economic growth falters.
• Growing Tight: The IEA said the world could face an oil- and gas-supply crunch in coming years amid rising demand.
• Thin Cushion: Economic growth is expected to spur demand, but the IEA sees OPEC's spare capacity narrowing and expects growth from non-OPEC sources to dwindle after 2009.
• Price Pressure: The forecast adds to concerns over world oil supplies and implies continued upward pressure on petroleum prices.

The IEA doesn't forecast oil prices, but its conclusions imply that consumers should expect continued upward pressure on the cost of energy.

"Oil and gas price pressures look set to remain in the coming years," the IEA report said. "Slower-than-expected [gross-domestic-product] growth may provide a breathing space, but it is abundantly clear that if the path of demand doesn't change on its own, it may well be driven to change by higher prices," the report said.