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Energy body warns on oil prices

By Sarah Mukherjee

BBC News

One of the world's leading authorities on energy supply says the era of cheap

oil is over and prices could soon be back up to $100 a barrel.

The International Energy Agency (IEA), in its World Energy Outlook for 2008,

says prices could soar as high as $200 a barrel by 2030.

The immediate risk to supply, it says, is not one of a lack of global

resources.

Instead, it points to a lack of investment where it is needed.

Rising costs

The world, the report's authors conclude, is not running out of oil just yet -

indeed, there is enough of it to supply the world for more than 40 years at

current rates of consumption.

But, they point out, field by field, declines in oil production are

accelerating and more money will be needed in research and development to

extract the oil there is.

While world oil supply will rise, the report's authors predict that massive

investments in energy infrastructure will be needed - an eye-watering $26

trillion dollars up to 2030.

A significant amount of this money - $8.4 trillion - will need to be spent on

oil and gas exploration and development.

In one scenario considered by the IEA, China and India will account for just

over half of the increase in world primary energy demand between 2006 and 2030,

and much of the increase in world oil demand.

But despite the agency's assessment of oil and gas reserves, the report

contains a stark warning of the consequences of continuing to rely on fossil

fuels.

The consequences for the global climate of policy inaction when it comes to

decarbonising the world economy are "shocking", according to the report.

"Strong, co-ordinated action is needed urgently to curb the growth in

greenhouse gas emissions and the resulting rise in global temperatures," it

said.