Publications: Notes at the Margin

The IEA's Fantasy (July 13, 2020)


The International Energy Agency issued its July forecast on July 10. The agency's forecasters once again seem to be dwelling on a planet in some distant solar system. Their latest projection is pure fantasy.


The IEA forecasters, for example, see global consumption averaging ninety-two million barrels per day in 2020. Their number is at least two million barrels per day too high. The industry will be lucky if world use averages ninety million barrels per day this year if current economic forecasts prove correct. Unfortunately, there is reason to believe those economic outlooks are overoptimistic.


The IEA forecasters also put global consumption at 97.4 million barrels per day in 2021. This estimate is even more farfetched. With luck (meaning the pharmaceutical industry produces a Covid-19 vaccine soon that prevents a second disease cycle), 2021 consumption will average 93.5 million barrels per day. Given the trends today, planners should not count on good luck.


Reports published by Bloomberg and The Wall Street Journal on Saturday, July 11, indicate that oil-exporting countries intend to boost production. In doing so, it becomes clear they want to keep prices lower for longer, intensifying pressure on US producers.


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