Energy Economy

Oil Consumption, Production Shifting: IEA World Energy Outlook

Oil Tanker
Source: Thinkstock
The International Energy Agency (IEA) released its 2013 World Energy Outlook on Tuesday morning, and its central argument is that the dynamics of energy production and consumption are rapidly changing. Demand is shifting to the emerging economies, principally China, India and the Middle East, and production from the tight shale formations in the United States is “making the United States the largest global oil producer” by 2015.

In its own World Oil Outlook published last week, OPEC predicted that shale oil production would plateau in North America before 2020 and decline thereafter. The IEA gives North America a few more years before the decline begins:

The Middle East, the only large source of low-cost oil remains at the centre of the longer-term outlook for oil. The role of OPEC countries in quenching the world’s thirst for oil is reduced temporarily over the next ten years by rising output from the United States, from oil sands in Canada, from deepwater production in Brazil and from natural gas liquids all over the world. But by the mid 2020s, non-OPEC production starts to fall back and countries in the middle East provide most of the increase in global supply.

The IEA also noted a shift in demand for refined products, and it notes that refiners need to invest more to meet rising demand for diesel fuel. The agency has been slow to understand the problem facing Europe, where carmakers and governments have promoted diesel-fueled vehicles but refiners have not made the necessary upgrades to produce the fuel. U.S. exports of diesel fuel to Europe are increasing and will continue to do so for some years to come.

The IEA does acknowledge that North American demand for crude oil imports “all but disappears” by 2035 and that North America is set to become a large exporter of refined products.