The Coming Oil Supply Crunch

A Chatham House Report by Paul Stevens

This report argues that unless there is a collapse in oil demand within the next five to ten years, there will be a

serious oil ‘supply crunch’ - not because of below-ground resource constraints but because of inadequate investment by international and national oil companies. An oil supply crunch is where excess crude producing

capacity falls to low levels and is followed by a crude ‘outage’ leading to a price spike. If this happens, the resulting price spike will carry serious policy implications with long-lasting effects on the global energy picture. In a new postscript considering developments since the publication of the report in August 2008, especially the fall in oil prices and the onset of global recession, the author argues that while they have affected the growth in demand

they have also inhibited investment in maintaining capacity. Therefore the supply-crunch scenario remains valid.

May 2009 (with new postscript)

ISBN: 978-1-86203-206-4

$15 / £10

Available online at www.chathamhouse.org.uk/publications/ or in hard copy by calling (+44) 20-7957-5700 Contents

VOLUME 65 NUMBER 7

THE WORLD TODAY, founded in 1945, is published by The Royal Institute of International Affairs. The Institute is precluded by its Royal Charter from expressing an opinion of its own on any aspect of international affairs. Any views expressed in this publication are, therefore, those of the contributors. Copyright is normally owned by The Royal Institute of International Affairs. Articles and letters should be sent to: The Editor, The World Today, Chatham House, 10 St James’s Square, London SW1Y 4LE. +44 (0) 20 7957 5712 email: wt@chathamhouse.org.uk gwalker@chathamhouse.org.uk Advertising and subscription enquiries: +44 (0) 20 7957 5712

THEWORLDTODAY.ORG JULY 2009

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PAGE 15 CLIMATE CHANGE

PAGE 7 DEMOCRACY

C U R T I S

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P H O T O

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4 IRAN ELECTIONS: Monumental Miscalculation Ali Ansari 7 DEMOCRACY: Dicing With Democracy Richard Youngs

The Quiet Democrat Nicolas Bouchet 10

13 ENGAGING IRAN: EUROPEAN LESSONS FOR AMERICA:

Tempting Tehran Riccardo Alcaro 15 BURMA: All Change or No Change? Richard Horsey

Trust the People Maung Zarni 18 21 CLIMATE CHANGE POLITICS: Dangerous Game of Dare

Bernice Lee and Antony Froggatt 23 RUSSIA: Strategic Lonliness Vadim Kononenko 25 CENTRAL ASIA: Power Plays Graeme P Herd and Katva Palazzolo 27 MEXICO: SWINE FLU: Victor or Victim? Rodrigo Delgado Aguilera 29 THE EURO AND THE GLOBAL FINANCIAL CRISIS: Surviving Strain

Max Watson

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