IEA forecasts that peak oil production started in 2006

The IEA is forecasting for the first time that the global crude oil production peak has in fact already been reached more than four years ago, in 2006.

International crude oil demand has since fallen slightly all thanks to the recent global economic downturn, but once economies around the world have recovered, the IEA says daily crude oil production alone will no longer be sufficient to meet their needs.

IEA Talks other Fuels, Renewable Energy

The 2010 IEA report forecasts that increases in other fossil fuels including natural gas and tar sands will help crude oil in meeting new demand with clean, renewable energy sources also making major gains.

The IEA says that daily global oil production will “plateau” at around 68 million barrels per day by 2035, as total energy demand increases by more than 35 percent over the same period. According to the report, by 2035 three quarters of currently operating oil fields won’t be producing anymore. In fact, current oil fields are only expected to account for less than one fifth of that year’s production.

Thanks in part to pledges from governments to reduce their countries’ reliance on fossil fuels though, new contributions to the energy mix will help to avert the sort of catastrophic oil spike that many have predicted to coincide with the start of the peak oil age.

But while the projection may bode well for the world economy, the IEA is convinced that even if governments live up to the pledges they made in lowering greenhouse gas emissions. If the world continues on its current trajectory, the IEA says that average global temperatures will likely rise by at least 3.5 degrees C. The IEA recommended that the following conditions must be met to achieve the intended outcomes:

The IEA Wish List

Oil demand must peak sooner and decline more sharply than it would under natural “peak oil” conditions.

Coal will have to play a significantly smaller role in the energy balance, with global demand peaking in 2020 and declining steadily thereafter.

Demand for gas and liquified natural gas must also also peak before the end of the 2020s.

Renewables and nuclear power must double to represent nearly 40 percent of the energy market by 2035.

Advanced vehicles will also have to make rapid gains in the coming years, to levels in the upper reaches of what most analysts believe is possible. By 2035, the IEA says that not only will 70 percent of new worldwide vehicle sales will have to come from advance technology plugin hybrid and electric vehicles, but that that those cars will need to run mostly on electricity generated from nuclear and renewable sources rather than fossil fuels.

The IEA’s Outlook is considered by many to be one of the most comprehensive and authoritative annual energy market analyses available to the public. The IEA has historically denied the existence of peak oil.

Is the World Running Out of Oil?

Of course this doesn’t mean the world is literally running out of oil, as the World Energy Outlook emphasises with its forecast of ever greater reliance on unconventional oil resources. But for these resources to become legitimate reserves, they have to be accessed at prices consumers can afford to pay. Yet even the IEA acknowledges that oil prices as high as $200 per barrel will be needed to make these resources economically viable in the future.

The global economy is now experiencing its most severe post war recession after its brief initial encounter with the very same oil prices that are now being forecast for our oil consuming future. And this recession happened despite record fiscal stimulus and bailouts (money printing) that have left countries including Greece and Ireland in debt for many years to come and may soon threaten the solvency of others including Portugal, Spain and Italy.