IMF Urges Oil Data Transparency, Predicts Rapid Oil Sector Changes

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In terms of growing demand the IMF is certain that the world is on the cusp of rapid change. "Demand is projected to grow rapidly, but prospects for increased production are uncertain. Although higher oil prices, if they persist, should encourage investment in the oil sector, impediments remain," it says.

For example, there exists a fear that oil producers could over-invest in case prices fall. Furthermore, it takes some seven years to proceed from the exploration stage to the drilling and consequently the production stage. The IMF also lists the uncertainty of the global economy reaction to short term high prices: If high prices cause a recession, demand for oil will fall and so will prices, making investment unattractive.

However, the Fund is sure demand will continue to grow and predicts that Opec will have to double production within 25 years, a feat that will require unprecedented levels of investment in member states. "Demand for crude oil is likely to grow steadily ... requiring large upstream investments conservatively estimated by the IEA at around $90 billion per year. "The IEA projects demand to rise by around 38 million barrels per day (mbpd) by 2030, although that may be conservative. With non-Opec production expected to increase by only 7mbd over this period, the call on Opec will double relative to today," says the IMF.

"It's a serious issue," analyst Bruce Evers of Investec in London tells Aljazeera.net. "Where will the extra supply come from? Opec has brought this on itself by not investing anything at all and it has paid too much attention to woeful underestimates of demand by the IEA."

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http://english.aljazeera.net/NR/exeres/E161F3F4-4602-4C09-AB80-8B121C0EABA0.htm

They say that OPEC will have to double production - but that simply cannot happen. It's like saying that the Sun must shine twice as brightly as it does today - or that days must become twice as long.

But I suppose that we will continue to deny Peak Oil until the end. Which well-nigh guarantees a worst case scenario. That, of course, isn't going to be funny at all.