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Oil Supply and Demand
The IEA'S Come-to-Jesus Moment
2007-07-13
By Chris Nelder

Q: What's the difference between an oil analyst and a used car salesman?

A: The used car salesman knows when he's lying.

That's a variation on the old joke about computer salesmen, but it can apply just as well to oil market analysts--such as the roughly 150 energy analysts and statisticians who work for the International Energy Association (IEA), the Paris-based agency that advises 26 OECD nations on energy.

On Monday this week, they had what I would consider a "come-to-Jesus moment," walking before the whole world to the front of the tent, admitting their unworthiness and publicly confessing their sins.

The confession was in their bombshell "Medium Term Oil Market Report," which looks at the global oil market over the next five years. And it was stark:

Despite four years of high oil prices, this report sees increasing market tightness beyond 2010 . . . It is possible that the supply crunch could be deferred--but not by much.

That was enough to set blogs and presses and email systems afire the world over. I was deluged with emails and phone calls about it. So I checked it out.

It's a decent piece of work, 82 pages with lots of good charts and data. It was also a welcome break from the delusional projections that the IEA has made for its entire 30-year existence, consistently predicting that supply will magically meet whatever the demand was projected to be.

Because for the first time, the IEA admitted that they have some doubts about oil supply keeping up with demand.



http://www.energyandcapital.com/articles/oil+demand-iea-peak+oil/470
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