7 November 2008 | Luca Del Buono

 

The era of cheap oil is over, the International Energy Agency warned yesterday as it predicted crude values would soon rebound to above $100 a barrel and double again by 2030 as fields in the North Sea and elsewhere in the world declined faster than expected.

More than $26tn (£16tn) of new investment would be needed over the next 20 years to ensure the world had enough energy, according to the IEA, which was founded during the oil crisis of 1973-74 and acts as energy policy adviser to 28 member countries including Britain.

"While market imbalances could temporarily cause prices to fall back, it is becoming increasingly apparent that the era of cheap oil is over," the organisation stated.

The developed world's energy watchdog has doubled its long-term price expectation from last year's $108 a barrel for 2030.

It assumes oil prices will rebound from today's $60-$70 a barrel to trade, in real terms adjusted by inflation, at an average of more than $100 from 2008 to 2015.

The summary, published yesterday, to the IEA's annual World Energy Outlook says the rise in oil prices is largely because companies will struggle to pump enough new oil to offset the production declines of the world's older fields.

But the organisation refuses to accept that what is known as "peak oil" has yet been reached.

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Source: The Guardian

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