A leading energy economist has warned that the world is heading for "a catastrophic energy crunch" that could cripple a global economic recovery because most of the major oil fields in the world have passed their peak production.Dr Fatih Birol, the chief economist at the respected International Energy Agency (IEA) in Paris, told the Independent newspaper in the U.K. higher oil prices brought on by a rapid increase in demand and a stagnation, or even decline, in supply could blow any recovery off course.
Birol is in charge of assessing future energy supplies by OECD countries.
His assessment is a grim warning for countries like Trinidad and Tobago where oil is the primary income earner that drives economic prosperity and national development.
"One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day," Birol said.
"The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously," he said.
Birol noted that the public and many governments appear to be oblivious to the fact that oil is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated.
He said the first detailed assessment of three quarters of global reserves has found that most of the biggest fields have already peaked and that the rate of decline in oil production is now running at nearly twice the pace as calculated just two years ago.
On top of this, he said, there is a problem of chronic under-investment by oil-producing countries, a feature that is set to result in an "oil crunch" within the next five years, which will jeopardise any hope of a recovery from the present global economic recession.
IEA's first-ever assessment of the world's major oil fields has concluded that the global energy system cannot sustain consumption levels of oil. It said in non-OPEC countries production has already peaked.
Birol is warning that even if demand remains steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to keep up with the expected increase in demand between now and 2030.
"It's a big challenge in terms of the geology, in terms of the investment and in terms of the geopolitics. So this is a big risk and it's mainly because of the rates of the declining oil fields," he said.
"Many governments now are more and more aware that at least the day of cheap and easy oil is over... [however] I'm not very optimistic about governments being aware of the difficulties we may face in the oil supply," he said.
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