The row over whether the International Energy Agency has or has not nurdled its oil data to (a) prevent financial market panic or (b) appease the Americans or (c) neither of the above, is interesting but a bit of a sideshow. What’s more interesting is how fast the notion that ‘peak oil’ is imminent has moved from being a contested minority view to being mainstream.

The IEA’s been stung by suggestions that its research lacks independence, and has taken the unusual step of publishing material normally only available to subscribers (opens in pdf) to try to demonstrate it. But the assumptions embedded in its projections tell their own story. By 2030, it suggests, the majority of world production will come from currently undeveloped (or not yet discovered) oilfields, even though the rate of discovery is falling and it takes typically 30 years to move from discovery to peak production. And unconventionals – such as the environmentally disastrous tar sands – grow, a lot.

The IEA’s view is not shared by other recent reviews of energy outcomes. The Oil Crunch, published this time last year and produced by a group which included a cross-section of British businesses, concluded that the problem of declining oil supply could hit Britain as early as 201, with serious consequences for the economy. (News story here, report downloads in pdf here).

Just a month ago the NGO Global Witness produced a report – “Heads in the Sand“, based on official data, which concluded that by 2015 there could be a substantial daily shortfall in oil supplies. It summarises the argument as follows: the size of oil discoveries has been trending downwards for forty years, and production has exceeded discovery since 1984; 17 of the world’s 20 largest fields are producing at below their historical highest levels; conventional oil production failed to grow between 2005 and 2008, despite high demand and high prices; and the IEA projects a drop in production from existing fields of almost 50%. To hit its 2030 projection will require new capacity which is six times the current Saudi production levels to be developed and brought onstream. [Update: A thorough but high level analysis of the background data and the implications for the global economy has been posted at The Oil Drum since I wrote this blog post.]

Looking for miracles

It’s perhaps not surprising that investment banker Matthew Simmons, an energy sceptic, had this to say about the IEA’s general projections:

What the new IEA leadership is warning is that declines in mature super giant fields will make it necessary to add the equivalent of four new Saudi Arabias over the next two decades just to keep demand flat. They intentionally avoided saying “obviously, this is impossible.”

The IEA was set up in the wake of the 1970s OPEC crisis to provide the leading energy consuming nations with reliable information about oil reserves, production, and consumption, and to advise on policy. Critics have long accused it of being captured by oil industry assumptions, and closed to critiques of these. In turn, its worldview – generally repeating industry prognoses that there would be no pressure on oil supplies until 2030 – has over-influenced policy-makers, especially in the UK, which is one of the reasons why Britain’s energy policy is in poor shape.

The current production forecasts remind me of Pierre Wack’s story of Shell’s ‘preferred’ 1970s oil scenario, the one that most chimed with the company’s worldview. It would, Wack observed, take ‘Three Miracles’ to come about. Miracles will also be required for the IEA’s projections to come about in practice, and indeed, much the same miracles – new reserves rapidly found and brought into production, large suppliers willing to produce at high levels, and no problems on the supply side.

The global energy unit at Uppsala University in Sweden last week produced its own 2030 Energy Outlook, in which it reckoned that  global production in 2030 was more likely to be 75 million barrels per day than the IEA’s 105 mpd (thanks to the Real World Economics Review blog for the reference; there’s also a handy couple of charts which show their competing production assumptions). As the Uppsala group says in its conclusion, “All our projections imply that the world oil production by 2030 will be lower than today.” This is one of the reasons why Kjell Aleklett, director of the Global Energy, unit has described the IEA’s report as a “political document”. But policy – certainly not in the medium-to-long-term, is not best-served by politicised research; in futures terms, such behaviour simply creates blindspots.

See also: Challenging Britain’s energy assumptions