17 November 2008 | Luca Del Buono

 

The looming global energy crisis is unlikely to be on the agenda when the leaders of the world's major economic powers gather in Washington on Saturday for the Group of 20 summit: After all, they're scrambling to fix the world's financial system and soften the landing of the slowing world economy, and energy may seem a lot less urgent than the credit crisis - indeed, one silver lining of the global financial crisis has been a falloff in energy consumption and therefore, lower oil prices.

But the respite could be brief, according to the International Energy Agency's analysts.

The Paris-based organization's annual World Energy Outlook, released on Wednesday, predicts that oil prices will start a steep climb soon, and by 2030 will settle around $120 a barrel - more than double this week's price - as producers face rocketing costs of equipment such as drills and rigs, and are forced into the increasingly expensive business of extracting oil from less accessible fields, many of them far out at sea.

Added to that, the world economy continues to grow - albeit at a slower rate - which will likely accelerate again at some point in the coming years - prompting billions more people to drive cars and burn electricity at home during the next two decades, says the report by the IEA, which represents the industrialized oil-consuming countries.

Securing sufficient energy supplies, and switching to low-carbon systems will require "radical action by governments."

The major oil companies remain hugely profitable and a popular target of politicians' ire, but their control over energy resources is dwindling, according to the IEA report - about 80% of new oil fields that come online during the next two decades will be entirely beyond their control.

While big oil fields controlled by countries such as Britain and Norway are stagnating or dwindling, giant new fields in Russia, Kazakhstan and Saudi Arabia were recently brought online just as oil prices hit record highs, and that massive windfall for oil-rich governments has tilted the balance of power away from old-fashioned big oil.

Increasingly, powerful nationalist politicians treat oil reserves as national patrimony.

Several countries have begun to renegotiate oil contracts with the major companies, in order to keep a greater share of revenues for themselves.

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Source: Time magazine

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