Only conservation efforts will keep a lid on energy costs: IEA
The Globe and Mail: Only conservation efforts will keep a lid on energy costs: IEA
CALGARY -- Growing output from Canada's oil sands is helping to put a ceiling on crude prices for now, but only a global conservation effort will keep energy costs from spiralling upward in coming years, says a senior official of the International Energy Agency.
"It plays a very important role in international oil diplomacy," said Fatih Birol, chief economist at the IEA, an offshoot of the Organization for Economic Co-operation and Development. "It plays the role of a cap in lots of the discussions."
Mr. Birol was in Calgary yesterday to meet with the heads of Canadian energy companies and financial institutions, part of a worldwide tour after the release of the IEA's Global Energy Outlook last month.
The rise in Canadian production, in essence, has strengthened the hand of the consumer nations that make up the OECD in its continual jousting with the Organization of Petroleum Exporting Countries.
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But the increase in synthetic oil output from the bitumen sands of northern Alberta will not be enough to counterbalance the rising influence of producers in the Middle East.
If current growth patterns in energy demand do not change, the Middle East and North Africa will account for 44 per cent of world supply by 2030, up from 35 per cent last year, the IEA said in its energy outlook report.
Even with major conservation efforts on the part of consuming countries, demand is slated to increase substantially, driven in part by rising energy use in China and India.
The likelihood of sharply higher energy consumption has led to a flurry of interest in peak-oil theories -- the worry that oil supplies will start to decline sharply in the immediate future.
Mr. Birol said such concerns always rise in step with the cost of oil. "It's a fashion. It comes every 10 years, when we have high prices. Four times, we've reached a peak in the last 20 years," he joked.
He said peak-oil works such as Twilight in the Desert -- which argues that Saudi Arabia is on the brink of a precipitous drop in crude production -- have helped to highlight the importance of clear and consistent standards for measuring the size of oil reserves.
Mr. Birol said Saudi Arabia will be able to increase its oil reserves and production whenever it wishes.
Equally influential on the supply side of the equation is China, whose transformation from oil exporter to importer has pushed it to scour the globe for crude assets -- including in Canada, where Sinopec Group has bought a 40-per-cent stake in Synenco Energy Inc.'s planned bitumen mining operation. That investment gives Sinopec the right to ship oil across the Pacific to its home market, and first call on any oil that Synenco wishes to sell to an unaffiliated third party.
China, through its state-owned firms, has been seeking deals that go beyond the bounds of Western-style financial arrangements and allow it direct control over oil shipments.
Mr. Birol cautioned that countries such as Canada "should be really careful what are the pros and cons, in commercial terms" and in their national interest in allowing such deals to go forward, but did not say that those arrangements were necessarily problematic.
CALGARY -- Growing output from Canada's oil sands is helping to put a ceiling on crude prices for now, but only a global conservation effort will keep energy costs from spiralling upward in coming years, says a senior official of the International Energy Agency.
"It plays a very important role in international oil diplomacy," said Fatih Birol, chief economist at the IEA, an offshoot of the Organization for Economic Co-operation and Development. "It plays the role of a cap in lots of the discussions."
Mr. Birol was in Calgary yesterday to meet with the heads of Canadian energy companies and financial institutions, part of a worldwide tour after the release of the IEA's Global Energy Outlook last month.
The rise in Canadian production, in essence, has strengthened the hand of the consumer nations that make up the OECD in its continual jousting with the Organization of Petroleum Exporting Countries.
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Mortgage Rates
Compare national rates by lender: See Chart
But the increase in synthetic oil output from the bitumen sands of northern Alberta will not be enough to counterbalance the rising influence of producers in the Middle East.
If current growth patterns in energy demand do not change, the Middle East and North Africa will account for 44 per cent of world supply by 2030, up from 35 per cent last year, the IEA said in its energy outlook report.
Even with major conservation efforts on the part of consuming countries, demand is slated to increase substantially, driven in part by rising energy use in China and India.
The likelihood of sharply higher energy consumption has led to a flurry of interest in peak-oil theories -- the worry that oil supplies will start to decline sharply in the immediate future.
Mr. Birol said such concerns always rise in step with the cost of oil. "It's a fashion. It comes every 10 years, when we have high prices. Four times, we've reached a peak in the last 20 years," he joked.
He said peak-oil works such as Twilight in the Desert -- which argues that Saudi Arabia is on the brink of a precipitous drop in crude production -- have helped to highlight the importance of clear and consistent standards for measuring the size of oil reserves.
Mr. Birol said Saudi Arabia will be able to increase its oil reserves and production whenever it wishes.
Equally influential on the supply side of the equation is China, whose transformation from oil exporter to importer has pushed it to scour the globe for crude assets -- including in Canada, where Sinopec Group has bought a 40-per-cent stake in Synenco Energy Inc.'s planned bitumen mining operation. That investment gives Sinopec the right to ship oil across the Pacific to its home market, and first call on any oil that Synenco wishes to sell to an unaffiliated third party.
China, through its state-owned firms, has been seeking deals that go beyond the bounds of Western-style financial arrangements and allow it direct control over oil shipments.
Mr. Birol cautioned that countries such as Canada "should be really careful what are the pros and cons, in commercial terms" and in their national interest in allowing such deals to go forward, but did not say that those arrangements were necessarily problematic.
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