The International Energy Agency (IEA) is predicting a potential oil glut by decade’s end, reports the Financial Times (FT), a “staggering” surplus possibly amounting to millions of barrels per day. In its annual report on the industry, the IEA predicts that continued investment and increased production by oil companies, particularly in the US, could lead to more than eight million barrels per day of spare capacity by 2030. That, despite the forecast that oil demand will peak before then. By the way, the IEA forecasted last year that demand for fossil fuels, oil, natural gas, and coal—will decline before the end of the decade amid the mass rollout of renewable energy and electric vehicles.
The subtext here is that oil companies should scale back investment. Of course, the IEA could be wrong about demand for any number of reasons, such as faster-than-expected economic growth or slower-than-expected adoption of electric vehicles. And the FT adds this statistical nugget:
Global capital spending on oil and fields rose to $538bn in 2023, the highest level since 2019 in real terms. The increase in investment was largely driven by state oil companies in the Middle East, which upped their spending to twice the levels seen 10 years ago, and China.
Whether the IEA is right or wrong about supply and demand, we are certainly living in a far different world than the one the energy doomers of the mid-2000s confidently predicted. As I write in my 2023 book, The Conservative Futurist: How To Create the Sci-Fi World We Were Promised, soaring oil prices back then fueled fears that global oil and gas production had peaked. Crude oil prices skyrocketed from $20 a barrel in 2001 to a record $147 by July 2008, reviving 1970s-era, “Limits to Growth” concerns about resource depletion. Some catastrophists, like journalist James Howard Kunstler, predicted a destabilizing oil shortage that would force Americans back to an agrarian lifestyle, with suburbs becoming slums or ruins.
The suburbs endured, of course. The global financial crisis reduced energy demand, and crude oil fell to nearly $30 by late 2008. At the same time, the wonder-working combo of government research and private-sector innovation enabled drillers to access shale oil and gas, boosting US production by 60 percent. The Shale Revolution reduced emissions by replacing coal with cleaner natural gas and paved the way, I hope, for advanced geothermal energy, promising clean, abundant energy worldwide.
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