Top energy economist: World oil supplies are rapidly depleting

A stark assessment from the International Energy Agency's chief economist concludes that the world's top oil fields have already surpassed peak production and that the world's oil supplies are running out faster than predicted.

The world is running out of oil at a pace that is considerably faster than prior assessments predicted - and the biggest oil fields in the world have already crested from peak production levels. This is the conclusion of the International Energy Agency's chief economist Dr. Fatih Birol. The prediction of a catastrophic energy crunch - as foretold in these collapsing fields - would cripple the global economy, sending energy prices skyrocketing and halting most transportation and production. "In an interview with The Independent, Dr Birol said that the public and many governments appeared to be oblivious to the fact that the oil on which modern civilisation depends is running out far faster than previously predicted and that global production is likely to peak in about 10 years – at least a decade earlier than most governments had estimated," The Independent reported on Monday. The first detailed study of 800 oil fields around the world - representing 75% of all known oil sources - demonstrated that the largest fields are already in decline and that the rate of decline is now nearly double the pace estimated just 2 years ago. This issue is amplified by the fact that oil-producing nations are not investing properly in oil production technologies - and the lack of investment will show itself within the next 5 years, just when the global economy needs to be in full recovery swing. The oil crisis will begin to be felt just after 2010. "One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before oil leaves us, and we have to prepare ourselves for that day," Dr. Birol told The Independent. "The earlier we start, the better, because all of our economic and social system is based on oil, so to change from that will take a lot of time and a lot of money and we should take this issue very seriously." "The market power of the very few oil-producing countries, mainly in the Middle East, will increase very quickly. They already have about 40 per cent share of the oil market and this will increase much more strongly in the future," he said. The IEA now estimates that oil production is declining at a 6.7 percent annual pace. These declines are going to have a significant impact on oil prices in the near-term and certainly in the long-term. "If we see a tightness of the markets, people in the street will see it in terms of higher prices, much higher than we see now. It will have an impact on the economy, definitely, especially if we see this tightness in the markets in the next few years," Dr. Birol said. "It will be especially important because the global economy will still be very fragile, very vulnerable. Many people think there will be a recovery in a few years' time but it will be a slow recovery and a fragile recovery and we will have the risk that the recovery will be strangled with higher oil prices," he told The Independent.