Oil price still too high, says IEA
While the price of oil has dropped off significantly from recent record levels, the prices is still too high, said Nobuo Tanaka, executive director of the International Energy Agency (IEA), to an audience at ONS on Wednesday, Aug. 27.
STAVANGER, Norway -- While the price of oil has dropped off significantly from recent record levels, the prices is still too high, said Nobuo Tanaka, executive director of the International Energy Agency (IEA), to an audience at ONS on Wednesday, Aug. 27.
Tanaka expects market fundamentals to improve during the second half of this year into 2009, and the oil price will reflect this. But it is unlikely to retreat to levels from a few years ago, he said. "The price will be linked to effective spare production capacity, and we expect this to remain low through 2013."
To mitigate capacity constraints, Tanaka recommends increasing energy supply, encouraging energy efficiency, and improving data transparency in all areas of the market.
In the long term, unless government policies change, world energy demand will by 55% by 2013, according to Tanaka. Oil, natural gas, and coal are expected to account for over 85% of the growth during this period. As a result, many countries will increasingly become dependent on imports, he said.
And CO2 levels will increase as well, unless we put a price on it, Tanaka said. "To cut CO2 emissions by 50% by 2050, we need to revolutionize the transportation industry," he said.
"To maintain the current CO2 emissions level through 2050, CO2 would need to be priced at $50/ton. But to reduce the emissions level by 50% by 2050, the price of CO2 would need to be increased to $200-$500/ton.
Clearly, carbon capture and sequestration (CCS) is the most crucial technology to develop. We would need to build 20 CCS stations over the next 20 years to meet emissions reduction goals."