[DantesPeak]

$this->bbcode_second_pass_quote('cat', 'S')o, possibly the IEA believes that the refinery issues will be solved and thus, due to increasing demand worldwide crude oil output will be too low, thus causing problems. At the same time OPEC seems to believe that there is no issue, and is even thinking about reducing output, but certainly not increasing it between now and when they meet again in September. Why such a different outlook on things? It will be interesting to see what happens here. Is it possible that OPEC is kind of testing the price, to see how high they can keep the price up before demand decreases? Or maybe they simply cannot increase capacity right now. Anyway it is all very intriguing - thanks for your reply DantesPeak

[Twilight]

$this->bbcode_second_pass_quote('Yahoo Finance, reprinting Financial Times', '[')b]Biofuels no threat to Opec, says IEA

Biofuels will provide only a small proportion of the world's demand for fuel in the next decade, the developed countries' energy watchdog has said in an attempt to reassure Opec that the need for oil will continue to grow.

Claude Mandil, the head of the International Energy Agency, told the Financial Times that, even in the worst-case scenario for the oil cartel, there would be a "dramatic" need for an increase in production by the Organisation of the Petroleum Exporting Countries.

"Opec has nothing to fear. Even in the most optimistic scenarios, the contribution from biofuels would be very small," Mr Mandil said.

Source: Yahoo Finance
Original FT article of 8 July no longer available.

[shortonoil]

Twilight:

$this->bbcode_second_pass_quote('', 't')here would be a "dramatic" need for an increase in production by the Organisation of the Petroleum Exporting Countries.

[IanC]

All around Portland, there are people with self-congratulatory Biodiesel bumper stickers on their diesel cars and trucks. Driving as much as always, they seem smug and superior. Frankly, it's sad to watch denial in action - they are still consuming as much as ever, producing CO2 and although getting fuel from a "sustainable" source, there is no conceivable way that the biofuels can scale to keep up with our current consumption levels of fossil fuels.

There is no easy answer to any of this, but it seems to me that reducing overall consumption, regardless of the energy source is the way to go. Bike man, geez.

-IanC

[Kyn]

Well, the IEA does what the OECD wants, and the OECD wants that OPEC invests in their oil fields and ignores the biofuels.

Biofuels will quite soon supply several percent of the gasoline consumption in the EU, USA and several developing countries. And at 7000-10000 Liters per ha, 10-15% of the worlds forests (4.5 billion ha) would be enough to substitute the entire world-wide oil consumption (of 2006).

Now, to do this would be ecologically catastrophic, but would the west or the corrupt local governments care?

We may never actually produce that much biofuels, but even the potential is both dangerous for the OPEC, which wants us to be dependent on them, and might be a limit to oil prices, at 100-150 Dollar or so...

[Kyn]

$this->bbcode_second_pass_quote('shortonoil', '
')It is that “dramatic” and “required” increase in production that has me worried. Bio-fuel has been a crippled old nag since it left the gate!

[Twilight]

No, I think a game is being played.

Energy organisations such as the IEA, USGS, US-EIA, and consultancies such as IHS/ CERA, must from time to time issue projections. These invariably have a gap, and the usual way of plugging it is by projecting massive expansion of OPEC production capacity or introducing a substitute (eg - "unidentified unconventional") as a balancing item. Lately, biofuels have been talked up with a view to serving this purpose.

OPEC knows that they have maxed their production capacity (minus storage tanks). They want to avoid being fenced into a showdown where the world declares its demand and asks to see their cards. So they take every opportunity they can to play down the need for additional production. Regardless of rising price and reports of shortages, they will keep reassuring the markets that supplies of crude are adequate to meet global demand and the bottlenecks are elsewhere, beyond their control and at any rate transient.

The IEA and its peers know that this is the game, but for obvious political and economic reasons, cannot blow the lid on the charade. So they must subtly challenge OPEC's excuses, going along with the theme, but saying what they must say implicitly.

In this particular case, OPEC recently warned that if consumer states pursue biofuel investment, they will revise their plans to invest in expansion of production/export capacity. They are in fact presenting the inevitable as a potential consequence of an action they know to be futile. The IEA counters this, as it must, by estimating biofuels' future contribution to world supply to be only 3%, and repeating that OPEC must, will expand capacity. This quite undiplomatic demand is framed as concerned reassurance, in the same way as OPEC's refusals are casually framed as reluctance. Hardly surprising really, as the IEA is a counterweight by design.

This, I think is how it works. It is a high-stakes argument with artificially polite language, thinly concealing the fact that some of the participants are now fingering daggers behind their backs.

That biofuels are a paper tiger has never been in doubt. What is interesting is one of the origami masters being forced to shred it so soon after its creation! So early in the game, it is failing to serve its intended purpose so badly that it is more useful denounced. Of course, the hype can continue to be served up for domestic consumption in the US, as no-one there follows the IEA, and this will be done knowingly. It is worth bearing in mind that a cornerstone of America's future energy strategy is something publicly undermined by the energy establishment in another forum. It surprised me however, that they were maneuvered into doing it so soon.

Incidentally, a little digression - the higher consumption is necessary. Paradoxically, the economy must grow in order to keep living standards steady-state, and energy conservation is very difficult to achieve without inflicting economic damage. That unnecessary car journey keeps the service industry worker at the destination employed, housed, fed, crime down and your house price high. There is lots of waste, lots of fat to cut off, but our populations have expanded on the premise that it is there. Endorsement of conservation is endorsement of austerity, and there are no personal politics behind that statement. That is why the likes of the IEA cannot back down. They act according to design. OPEC understands that too.

Eventually these little sparring matches that keep up appearances will become untenable. That's when things become interesting.

[DantesPeak]

Twilight - very well put, and in addition, OPEC has been making a lot of noise about outside investors providing all the needed investment to improve energy infrastructure.

That might make some sense in countries where there is not much of a federal fiscal surplus, but not in SA and most Arabian Peninsula OPEC members. Still it one more good excuse for them.

OPEC evens admits now that prices are totally out of their control, so now they won't have to react to higher prices anymore.

[zoidberg]

$this->bbcode_second_pass_quote('Twilight', '
')Eventually these little sparring matches that keep up appearances will become untenable. That's when things become interesting.

[Twilight]

$this->bbcode_second_pass_quote('zoidberg', 'T')hat is the essence of the thing. What would your idea of an interesting scenario be? Like what kind of headlines from the IEA would we be reading then? Or is that the end of talking about it?

[shortonoil]

Twilight said:

$this->bbcode_second_pass_quote('', 'I')f the sparring is over, it means depletion is accepted, has manifested itself, and OECD economies are ruined. It is difficult to speculate what purpose the IEA might serve then.

[Doly]

$this->bbcode_second_pass_quote('ferrelgiraffe', 'D')riving around with a BIOFUELS or BIODIESEL bumper sticker says two things
1. Hi, I am brainwashed , not very bright, and I like driving an SUV.

[shortonoil]

Every time, I see someone driving a new SUV, I sort of chuckle, and say to myself, “That thing probably has a seven year mortgage on it; I guess the dam fool doesn’t know that in four or five, he probably won’t be able to find gas for it.”

Of course, it is not nice to wallow in other peoples misfortune, but this is sort of like watching Harry, Larry and Moe all day long.

It helps me get through the day without screaming!

[jdmartin]

$this->bbcode_second_pass_quote('Twilight', 'N')o, I think a game is being played.

....

Eventually these little sparring matches that keep up appearances will become untenable. That's when things become interesting.

[Graeme]

IEA Warns Of Oil Crunch On OPEC Capacity,Demand Rise

$this->bbcode_second_pass_quote('', 'T')he International Energy Agency Tuesday raised the prospect of a global oil crunch this year on a recipe of higher-than-expected demand and below-par supply from the Organization of Petroleum Exporting Countries and its producer rivals.

In its widely watched monthly oil market report, the agency, the energy security watchdog for the Organization for Economic Cooperation and Development, warned that demand risked outstripping OPEC's ability to boost its output, a situation made worse by daily production growth from non-OPEC suppliers falling below the psychologically significant 1 million barrels a day this year.

[kevincarter]

$this->bbcode_second_pass_quote('', 'T')he agency said the country's [Russia] output may climb 7% to 10.6 million barrels a day by 2010 but then slip a little over the next two years.

[DantesPeak]

$this->bbcode_second_pass_quote('', 'I')nternational Energy Agency has raised its global oil demand forecast for this year and repeated its concerns that global stockpiles were heading for the low levels of 2004 when crude prices surged.

The energy agency also renewed its call for the Organisation of the Petroleum Exporting Countries to raise its crude production quotas.

“We would very much hope that OPEC production is at its seasonal low at the moment,” said David Fyfe of the IEA: “We definitely need more crude oil.”

[Bas]

oh, now they start to worry......But they still say that within a year or two everything will be fine again, and there will be enough supply and prices will fall right? Bunch of corrupted amateurs they are.

[BrazilianPO]

But... but.. but... wait a minute, weren't those the same guys that used to say that alternative oil sources would replace any reduction in conventional oil production and still make up for any increase in world consumption? What are they afraid of? Will we be making 120Mb a day by 2020 or not after all?

We are soooooo screwed with these guys at the wheel.
We need conservation. Simple as that. Mandatory conservation, followed by government incentives to use of alternatives. Money in the pocket. Buy a hybrid car, get money. Put a solar panel on your roof, get some more money. Solar water heating, deduct 100% from your annual taxes.

People need to leave inertia, but they will not do it by themselves. They need an incentive, which can be either expensive gas and electricity, or government bonuses. I prefer the second option.