Has the US Energy Information Agency, traditionally one of the more bullish of the long-term forecasters on oil production, changed its tune? [Update: perhaps not so much. See after the jump.]
Steven Kopits of energy consultants Douglas-Westwood (and sometime FT ES reader), thinks so — particularly with its forecasts out to 2020.
In an interesting post on The Oil Drum, he points out that the agency’s latest annual International Energy Outlook significantly revised downwards its oil production forecasts, particularly out to 2020:
The divergence between the grey ‘actual’ production rate and the rates previously forecast by the EIA are fascinating - although the sharp divergence in 2009 could have been easily guessed at.
Looking to 2030, the EIA still sees oil production at an optimistic 103.9m barrels per day in its reference case (the IEA, for comparison, is 103m).
But as Kopits notes, the EIA’s forecasts to 2020 — 92.1m barrels a day — are now lower than almost anyone’s:
For example, its forecasts to 2020 are 2-3 mbpd lower than that of traditionally dour Total, the French oil major. And they are below our own forecasts at Douglas-Westwood through 2020. As we are normally considered to be in the peak oil camp, the EIA’s forecast is nothing short of remarkable, and grim.
Update: Another reader, Michael Levi at the Council on Foreign Relations, has already looked at this, and reckons that GDP forecasts, rather than a change of heart about oil supply per se, is behind the EIA’s downward revisions.
After adjusting for inflation, he says the EIA’s estimates of 2020 GDP have fallen from $118,000bn (in its 2007 forecast) to $97,500bn (in its 2010 forecast) — both in 2005 dollars.
And if overall economic growth is lower, so is demand for oil. This inevitably affects supply: producers won’t go to the trouble of extracting oil that no-one wants. And Levi estimates that the downward GDP revision is more than enough to account for the reduction in the oil output forecast.
He adds:
The only way out for someone who wants to blame the lower supply projections on peak oil is to argue that the lower GDP projections are themselves a consequence of peak oil. The argument would say that the lower GDP projections are the result of the current recession (true), that the current recession was the result of high oil prices (possible but debatable ), and that the high oil prices of 2002-2008 were the result of peak oil (who the heck knows).
But that, Levi writes, doesn’t appear to be the EIA’s logic, because even its high oil price scenario* - over $180/barrel in 2020 - doesn’t seem to envisage an economic downturn as a result.
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[*The EIA's International Energy Outlook uses scenarios, like most other long-term forecasts. Its particular scenarios vary according to economic growth and oil prices.]