Energy body IEA warns on oil prices

One of the world's leading authorities on energy supply says the era of cheap oil is over and prices could soon be back up to $100 a barrel.  The International Energy Agency (IEA), in its World Energy Outlook for 2008, says prices could soar as high as $200 a barrel by 2030. The immediate risk to supply, it says, is not one of a lack of global resources. Instead, it points to a lack of investment where it is needed.

Rising costs: The world, the report's authors conclude, is not running out of oil just yet - indeed, there is enough of it to supply the world for more than 40 years at current rates of consumption. But, they point out, field by field, declines in oil production are accelerating and more money will be needed in research and development to extract the oil there is.  While world oil supply will rise, the report's authors predict that massive investments in energy infrastructure will be needed - an eye-watering $26 trillion dollars up to 2030. A significant amount of this money - $8.4 trillion - will need to be spent on oil and gas exploration and development. In one scenario considered by the IEA, China and India will account for just over half of the increase in world primary energy demand between 2006 and 2030, and much of the increase in world oil demand. But despite the agency's assessment of oil and gas reserves, the report contains a stark warning of the consequences of continuing to rely on fossil fuels. The consequences for the global climate of policy inaction when it comes to decarbonising the world economy are "shocking", according to the report. "Strong, co-ordinated action is needed urgently to curb the growth in greenhouse gas emissions and the resulting rise in global temperatures," it said.