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Analysis: Reading Oil's Tea Leaves

Council on Foreign Relations

July 26, 2007
Prepared by: Toni Johnson

A recent study from the U.S. National Petroleum Council (NPC), led by former ExxonMobil chairman Lee Raymond, asserts global energy consumption will increase as much as 60 percent by 2030 but assures “the world is not running out of energy resources.” The report says the world is entering an era of tight energy supplies where global oil production could drop to 5 percent below current output by 2030. The Financial Times says the NPC study represents “a defining moment in the history of the global energy industry” crystallizing the “unease about global energy supplies that has been accumulating over the past couple of years.”

The Petroleum Council recommends strengthening U.S. fuel economy standards, further developing biofuels, and increasing domestic drilling for oil and gas. It also calls on the United States to take up policies to curb greenhouse gas emissions, similar to recommendations made by a recent CFR Task Force on U.S. oil dependency. Such recommendations may be surprising coming from Raymond, well known for his skepticism about global warming, and the New York Times says they “probably far exceed” what the Bush administration was expecting when the U.S. Energy Department requested the study in 2005.

But the NPC study fed a new round of debate among energy experts about the availability of supplies. The Association for the Study of Peak Oil and Gas, a nonpartisan research organization studying global oil and gas depletion, says the NPC report “artfully camouflages the enormous near-term challenges in producing sufficient oil and gas to fuel the global economy” and contradicts a recent report from the International Energy Agency (IEA) indicating an oil supply “crunch” as early as 2012.

Read the rest of this article on the cfr.org website.

Copyright 2007 by the Council on Foreign Relations. This material is republished on GlobalSecurity.org with specific permission from the cfr.org. Reprint and republication queries for this article should be directed to cfr.org.