Posted: November 17, 2009
Apparently, last week’s International Energy Agency (IEA) numbers regarding future oil supplies were fudged to protect the innocent or at least our frail economic recovery. According to a whistleblower who whispered in the ear of The Guardian, the world is much closer to running out of oil that we think.
So, what is to be gained or lost by such skullduggery? Stockbrokers, bankers and oil investors jumping out of windows…sure, but what is the downside? (Insert sarcasm here).
The comments in the UK’s respected Guardian stated that the IEA has inflated its 2009 report of oil reserves for fear that the truth would shock world markets into a reactionary panic. IEA is alleged to have put its role as an industry watchdog in the kennel for the time being to fend off a potential buying panic…even at the risk of being exposed for overplaying supplies and chances for finding increased reserves.
On face value this might seem to be based on at least a modicum of twisted logic, but what are the ramifications for world governments who govern, plan and even invest based on IEA’s data? Consider that they also develop their own energy policies based on such essential information.
According to the Guardian’s high-level IEA source, estimates of global oil production growing from its current level of 83 million barrels per day to 105 million barrels per day are as bogus as the Tooth Fairy. The source said many IEA officials believe even 90 million barrels per day is unreachable, but the agency will not lower its forecast because it fears panic could spread through financial markets.
If we have indeed entered the “Peak Oil Zone” (that strange and unfamiliar place where we actually feel the pressure to get real about “energy policy” not oil policy) then it is time to fess up like an alcoholic at an AA meeting. “Hi my name is Joe Consumer and I have a petroleum problem.”
Timing for such smoke and mirrors regarding oil supplies couldn’t be worse. How should this be coloring world climate talks in Copenhagen? Hmm…my noble indignation seems to be sputtering like my car as it runs out of gasoline.
And then there is ethanol. The EPA is in the final stages of deciding if this nation should move to higher blend levels (15% ethanol). If the cheap oil petro palooza we have enjoyed for decades is over we might want to factor that into this critical discussion regarding the best/renewable, domestic solution available today.
Corn farmers and the ethanol industry stand ready to produce and serve but they and the investment community need to get the word that it is full speed ahead for alternative energy sources. Given The Guardian’s report it would be foolish to allow big oil to continue to crank out just enough oil to manage their profits and squash emerging competition like ethanol.
If the IEA is inflating oil production numbers then continued complacency is our worst enemy. So, call your elected officials today…shoot, call your minister, your mother and your grocer for good measure and tell them we need higher ethanol blends now! Just don’t tell your banker or broker if you like them.