(AFP) – Nov 6, 2008

PARIS (AFP) — The oil price will swing wildly around 100 dollars for a few years and double to 200 dollars in 22 years' time, the IEA forecast on Thursday.

This was a sharp increase in its estimate 12 months ago but implied a relatively mild projection of the trend in the last two years.

The International Energy Agency's estimates of nominal price rises up to 2030 contrast with a tripling of the price over just 18 months to 147 dollars a barrel in July.

The agency reassured that there would be enough oil for decades to come but warned that global prosperity and the state of the planet hang on radical change in energy production and usage.

"The world's energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable -- environmentally, economically, socially," the IEA warned in a summary of its annual World Energy Outlook report.

"But that can -- and must -- be altered: there's still time to change the road we're on."

"The future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply."

The IEA declared: "Preventing catastrophic and irreversible damage to the global climate ultimately requires a major decarbonisation of the world energy sources."

It pointed to huge strides being made in electricity production, and projected that "modern renewable technologies grow most rapidly, overtaking gas to become the second-largest source of electricity, behind coal, soon after 2010."

The oil price would reach 200 dollars by 2030, but after allowance for inflation, would be about 120 dollars a barrel in "real" current terms, the IEA said.

The price of benchmark oil was 64.88 dollars on Thursday. This is a long way down from a record peak of 147 dollars in July when the price had tripled in 18 months, raising alarm about long-term costs, supplies, and new energy technologies.

When the price reached 100 dollars at the beginning of this year, some analysts forecast it could reach 200 dollars next year. Since then high fuel prices, financial crisis and advancing recession in leading economies have switched back market conditions, for a time.

The IEA, the energy monitoring and policy arm of the Organisation for Economic Co-operation and Development, forecast in an executive summary of a full annual report to be published on Wednesday, that:

- The world will continue to be massively dependent on oil and gas for a long time but there are enough resources to meet rising demand for many years to come;

- Most of the growth in production will come from the Middle East, Africa and Russia and most of the growth in demand and carbon emissions from China, India and the Middle East;

- Inaction on environmental problems would result in a doubling of greenhouse gases by the end of the century and an eventual average temperature increase of up to six degrees centigrade;

- Huge investment is required in oil and gas production, and in other energies urgently needed to diminish "shocking" threats to the planet, but national companies may not be able to invest fast enough in oil and gas.

- The cumulative investment effort needed to 2030 exceeds 26 trillion dollars (20 trillion euros) (in 2007 money values), or 4.0 trillion dollars than estimated 12 months ago;

- International oil groups will be increasingly squeezed by national factors.

The agency said it expected the price of oil to average 100 dollars a barrel from 2008 to 2015, then about doubling by 2030.

The agency said its latest forecasts for prices were a big upward adjustment from its forecasts last year, owing to a review of production costs and demand.

Global spending on oil soared from 1.0 percent of global gross domestic product in 1998 to about 4.0 percent in 2007, hitting hard at consuming countries. It was expected to stabilise at 5.0 percent, but for non-OECD countries it would be 6.0-7.0 percent.

The only comparable period of such high spending was in the early 1980s when it exceeded 6.0 percent.

"Oil is the world's most vital source of energy and will remain so for many years to come," the report said.

There is enough oil in the world to feed the expected rise in production beyond 2030. "The world is not running short of oil or gas just yet," the IEA reassured.

Estimates of remaining proved reserves of oil and natural gas "range from about 1.2 to 1.3 trillion barrels" and had almost doubled since 1980. "This is enough to supply the world for over 40 years at current rates of consumption."

The agency estimated that world primary energy demand would grow by 1.6 percent a year from 2006 to 2030, or an overall increase of 45 percent.

"China and India account for just over half of the increase in world primary energy demand," in this period.

Middle East demand would account for 11 percent of the increase, and non-OECD countries 87 percent, taking their share of total world demand from 51 percent to 62 percent.

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