After the Recession, an Energy Crisis Could Loom

Here's the bad news about the global recession's potentially coming to an end: the recovery could spark a massive energy crisis with increased demand for fossil fuels from China and other developing countries, tighter oil supplies and skyrocketing oil prices. And this is just in the near future. The longer-term picture looks even more daunting. If the world continues to guzzle oil and gas at its present pace, global temperatures will rise by an average of 6°C by 2030, causing "irreparable damage to the planet."

The warning from the International Energy Agency (IEA), an intergovernmental energy watchdog based in Paris, could add extra weight to the negotiations leading up to the climate-change summit in Copenhagen next month, when leaders will attempt to come to an agreement on a successor to the Kyoto Protocol's limits on greenhouse-gas emissions. "Saving the planet cannot wait," reads the agency's annual World Economic Outlook report, which was released on Tuesday. "The time to act has arrived."

But the energy crisis may be even more critical than what the IEA is saying. According to a report in the Guardian on Tuesday, the agency, under pressure from the U.S., has in past reports deliberately underestimated just how fast the world is running out of oil. The newspaper quoted an unnamed senior IEA official as saying that the U.S. encouraged the agency to "underplay the rate of decline from existing oil fields while overplaying the chance of finding new reserves."

The official questioned the prediction in last year's World Economic Outlook that oil production could be raised from the current level of 83 million bbl. a day to 106 million bbl. a day, saying the estimate was higher than is feasible. This year's report lowers that prediction to 105 million bbl. a day. But critics of the IEA have long said the world has passed its peak in oil production and that such levels are unrealistic.

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