LONDON, Oct. 31 â€” The rapidly growing appetite for fossil fuels in China and India is likely to help keep oil prices high for the foreseeable future, threatening a global economic slowdown, a top energy expert said on Wednesday.
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Oil Leaders Say Prices Are Not Their Fault
The unusually stark warning by Fatih Birol, chief economist of the International Energy Agency, about the effect of Asiaâ€™s emerging giants comes as the agency prepares to issue its influential annual report next week, which will focus on China and India.
In preparing the report, Mr. Birol said he had experienced â€œan earthquakeâ€ in his thinking.
â€œChina plus India are going to dominate growth in the oil markets,â€ Mr. Birol said during an interview at an oil industry conference. Over the last 18 months, he noted, more than two-thirds of the growth in global oil demand came from China and India alone.
Demand for oil in China, he added, would eventually equal the entire supply from Saudi Arabia. Partly as a result, the annual report will predict that oil prices could hit levels much higher than once thought possible, heightening the risk of a serious global economic slowdown.
â€œWe may see very high prices that will come to a level where the wheels may fall off,â€ Mr. Birol said. â€œI definitely believe that if prices stay at these levels, there will be a slowdown of the global economy.â€
Mr. Birol said that China and India could help reduce demand and the environmental effect of their booming energy consumption by introducing greater efficiencies, building up renewable sources of energy, using more nuclear power and by cutting emissions.
â€œWe think that climate change should be one of the topics that they reconsider as both China and India are becoming major players in the global international scene,â€ Mr. Birol said. â€œIn accordance with that, they should also receive some responsibility.â€
China and India have long resisted calls to cut emissions, saying they need to grow to match standards of living in developed countries.
They argue that other large emitters of greenhouse gases, like the United States, should lead the way in cutting emissions before poorer and less developed nations bear the same costs.
The debate, which has undermined the Kyoto Protocol, a global treaty on greenhouse gas reductions, is set to resume when nations meet in December in Bali, Indonesia, where the two-year process of negotiating a successor treaty to Kyoto formally begins.
At the oil conference, organized in part by The International Herald Tribune, major industry players struck a firmly upbeat tone about oil production â€” particularly if prices stay high.
â€œAt $93 a barrel, everything is possible,â€ said JosÃ© Sergio Gabrielli de Azevedo, chief executive of the Brazilian oil company Petrobras. He suggested that oil producers would continue to have incentives even to pursue the most expensive technologies, like producing oil from shale at $70 a barrel.
But other officials at the event, including Guy F. Caruso, an administrator at the Energy Department, emphasized the need for continuing investment to recover oil from well-established oil-producing sources and countries, where he said the most important supplies would continue to originate.
Demand for energy from China and India is coming at a time when structural changes are under way in global oil markets, reinforcing the view among experts that there will be a period of increasingly tight supplies ahead. Fields in many parts of the world, including the North Sea, the United States and Russia, have hit a plateau or are in decline.
Should governments fail to limit growth in oil demand or to find alternative energy sources, especially in China, India and developed nations, â€œwe may see price levels much higher than we conventionally believed in the past,â€ Mr. Birol said.