By David Blackmon
A headline atop a news story reads, “Oilfield decline will hasten without $540 billion annual investment, says IEA.” International Energy Agency chief Fatih Birol says “Decline rates are the elephant in the room for any discussion of investment needs in oil and gas, and our new analysis shows that they have accelerated in recent years.”
To anyone familiar with the past pronouncements emanating from Mr. Birol and the IEA, this amounts to one of the most breathtakingly ironic about-faces ever seen. After all, it was only four years ago that Birol and his IEA analysts informed the world that new investments in exploration and development of additional crude oil resources were no longer needed or desired thanks to the glorious expansion of wind and solar capacity and electric vehicles that were destined to end the need to use oil and gas by the year 2050.
In May, 2021, the IEA published a report that urged every national government to immediately halt new investments in efforts to find and produce new reserves of oil, saying, “Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required. The unwavering policy focus on climate change in the net zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output – and emissions reductions – from the operation of existing assets.” (RELATED: Trump Admin Torpedoing Biden’s Oil And Gas Crackdown)
On Aug. 4 of that same year, Birol himself told a meeting of Catholic Church leaders that “there is no need to invest in oil, gas or coal.”
On Oct.14, 2021, Birol doubled down on that particular sophistry in a post on Twitter, with this claim: “There is a looming risk of more energy market turmoil. Oil & Gas spending has been depressed by price collapses in recent years. It’s geared toward a world of stagnant or falling demand.”
Of course, the problem with the IEA’s thesis then is the same as now: Demand for crude oil has been neither stagnant nor falling. It has in fact continued to rise apace with global economic expansion, continuing a trend that has characterized the industry’s growth path for well over a century now. Economic growth has always driven rising demand for oil, just as plentiful supply of oil at affordable prices drives further economic growth. It is and always has been a mutually sustaining relationship.
Finally, IEA appears to have reached a point at which it is willing to accede to this enduring reality.
In my previous piece here, I detailed the apparent move by Birol and the IEA to shift back to the agency’s original mission to serve as a provider of reliable, fact-based information about the global energy picture. It was a mission the agency consciously abandoned in 2022 in favor of serving as a cheerleader for an aspirational energy transition that isn’t really happening. That return to mission appears to have been motivated by Energy Secretary Chris Wright’s threat to pull U.S. funding from the Agency if it continued down this propaganda pathway.
The IEA report published on Tuesday finally acknowledges the troubling under-investment in exploration and development of new reserves that has plagued the industry for more than a decade now as banks and investment houses discriminated against investing in fossil fuel projects.
Regardless of the reasons behind this latest shift, it is encouraging to see the IEA once again living in the world as it exists rather than the fantasy realm advocated by the global political left.
