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Oil prices are in 'danger zone', warns the IEA | |
(about 2 hours later) | |
Oil could hit $150 a barrel soon if investment in the Middle East and North Africa fails to rise with demand, the International Energy Agency (IEA) says. | |
Prices have remained high throughout 2011, partly due to Libyan unrest. | |
"We are in the danger zone for the global economy at current levels," said IEA economist Fatih Birol. | "We are in the danger zone for the global economy at current levels," said IEA economist Fatih Birol. |
The IEA also wants more investment in green technology, warning that the world is heading down an "insecure, inefficient and high-carbon" path. | |
"Growth, prosperity and rising population will inevitably push up energy needs over the coming decades," said IEA executive director Maria van der Hoeven. | |
"But we cannot continue to rely on insecure and environmentally unsustainable uses of energy." | |
In its annual World Energy Outlook, the agency says that as years pass without clear economic drivers towards clean energy investment, the "lock-in" of high-carbon infrastructure makes it progressively harder to meet energy security and climate goals. | |
Oil rising | |
The agency warned that oil prices could keep rising through $150 a barrel in just a few years' time towards $212 a barrel by 2035, as the world supply becomes dependent on a small group of suppliers in North Africa and the Middle East. | |
One-month futures for Brent crude have averaged more than $100 a barrel for 2011 so far. | One-month futures for Brent crude have averaged more than $100 a barrel for 2011 so far. |
But despite the end of the conflict in Libya, the IEA says there is a possibility that production growth from the Middle East and North Africa (MENA) will not be sufficient to meet demand over the next few years. | But despite the end of the conflict in Libya, the IEA says there is a possibility that production growth from the Middle East and North Africa (MENA) will not be sufficient to meet demand over the next few years. |
"If, between 2011 and 2015, investment in the MENA region runs one-third lower than the $100bn per year required, consumers could face a near-term rise in the oil price to $150 per barrel," said the IEA. | |
In the longer term, the industry faces declining output from existing fields and rising demand from developing countries. | In the longer term, the industry faces declining output from existing fields and rising demand from developing countries. |
"We have to find and develop two new Middle Easts, that's a tall order," said Mr Birol. | "We have to find and develop two new Middle Easts, that's a tall order," said Mr Birol. |
On Tuesday, President Barack Obama agreed to allow further oil and gas drilling in the Gulf of Mexico and Alaska. | On Tuesday, President Barack Obama agreed to allow further oil and gas drilling in the Gulf of Mexico and Alaska. |
Gas prices are forecast to remain more stable in the short term, because of rising supply from so-called unconventional sources, such as shale. | Gas prices are forecast to remain more stable in the short term, because of rising supply from so-called unconventional sources, such as shale. |
Earlier this week, Mr Birol called for subsidies on fossil fuel use to be cut, telling the EurActive agency that the "$409bn equivalent of fossil fuels subsidies encourage... wasteful use of energy." | |
The G20, at its recent meeting in France, pledged to work towards an end to fossil fuel subsidies without specifying a timescale. |
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