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Energy Supply Crunch By 2010

The International Energy Agency (IEA) has warned of increased pressure on global oil and gas markets from 2010. HomepageDAILY reports on how the energy supply crunch may be with us sooner than feared.

"Oil looks extremely tight in five years time", the IEA report said, and there are "prospects of even tighter natural gas markets at the turn of the decade". As OPEC’s spare capacity evaporates, the agency predicts global demand will continue to escalate, leading to a supply crunch and high oil prices.

The IEA’s Medium-Term Oil Market Report, which is published every six months, predicted OPEC's supply cushion of unused capacity will rise until 2010, then decline to "uncomfortably low levels''.

"Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with OPEC spare capacity declining to minimal levels by 2012'', it reports. The loss of OPEC’s spare capacity over the past decade has made the market increasingly skittish about any development that might threaten oil supplies.

The IEA has also warned that significant increases in oil-refining capacity in recent years, combined with a doubling of bio-fuel production, will not be enough to meet escalating global demand for oil. It forecast that as the world economy expands by roughly 4.5 per cent a year, demand for oil products will increase by an average 1.9 million barrels per day (bpd) or 2.2 percent per year to reach 95.8 million barrels a day by 2012.

World production of biofuels is predicted to reach 1.75 million bpd by 2012, more than double 2006 levels, but the fuel will remain marginal as economics hobble further growth.

The IEA has previously been described as one of the ‘notable optimists’ on future oil supplies, contradicting claims of an impending oil crisis.

Sounds like it's not an optimist any more.

Image: Sun setting over a Texas oil refinery, courtesy of ABC news.

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Titles such as Ancient Maya: The Rise and Fall of a Rainforest Civilization fill faculty bookshelves. It has also provided fodder for literature and films, most recently Mel Gibson's Apocalypto. There is a grim, irresistible appeal to this tale of central American oblivion. Recent events have injected a jarring note into Mayan studies: a sense of anxiety, even foreboding. Serious people are asking a question that at first sounds ridiculous. What if the fate of the Maya is to be our fate? What if climate change and the global financial crisis are harbingers of a system that is destined to warp, buckle and collapse?

No one is suggesting that vines will start crawling up the concrete canyons of Wall Street, or that howler monkeys will chase pin-striped bankers through Manhattan. Mayan kings who screwed up were ritually tortured and sacrificed with the aid of stingray spines to pierce the penis; an emphatic application of moral hazard. In our era, the only thing slashed is a bonus. There are, however, striking parallels between the Maya fall and our era's convulsions. "We think we are different," says Jared Diamond, the American evolutionary biologist. "In fact . . . all of those powerful societies of the past thought that they too were unique, right up to the moment of their collapse."

Complex and organised it may have been but Mayan society resembled a frog who stays in slowly boiling water. The environmental trouble built up over centuries and was partly concealed by short-term fluctuations in rainfall patterns and harvest yields. But when the tipping point came, events moved quickly. "Their success was built on very thin ice. Kings were supposed to keep order and avoid chaos through rituals and sacrifice," says David Webster, author of The Fall of the Ancient Maya. "When manifestly they couldn't do it people lost confidence and the whole system of kingship fell apart."

Which brings us to modern parallels. Webster, watching the season's first snowflakes through the window of his office at Pennsylvania State University, has been waiting for the question. Pinned to his wall is an old clipping about the fall of Enron Corporation in 2001. "That was the first tremor," he muses. "You know, human beings are always surprised when things collapse just when they seem most successful. We look around and we think we're fat, we're clever, we're comfortable and we don't think we're on the edge of something nasty. Hubris? No: ignorance."

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