Oil shortage looms

Press, 1 May 1978, Page 16

Oil shortage looms

By

BRIJ KHINDARIA

in Geneva

Proven reserves, of oil will be exhausted by 1996 and probable reserve 12 to 15 years later. That is the forecast in a report to the Economic Commission for Europe, which groups North America, the Soviet Union and Western and Eastern Europe. The report says the West cannot rely on O.P.E.C. countries for continued vast supplies because in the long run, exporters will find it pointless to accumulate foreign currency reserves ‘ whose value is easily eroded. It is therefore essential to allow the oil exporters to participate in international decisions on monetary affairs to build up trust. The report estimates that world demand for O.P.E.C. oil will be almost 3000 million tons a year by 1990, compared with 1360 million tons in 1975. O.P.E.C.’s current maximum production capacity is about 2000 million tons a year but several

O.P.E.C. members are known to be trying to reduce their output.

Even Eastern European countries—which traditionally get most of their oil at concessional rates from the Soviet Union — will turn to O.P.E.C. for purchases by 1985, because of an expected fall in the Soviet surplus. That will drop from about 11 per cent of total production in 1980 to just 4 per cent in 1990.

Oil will be exhausted even more quickly, by 1991, if there is a return to the pre--1973 consumption growth rate of 7.9 per cent per annum. The forecast says, however, that in 30 to 35 years, there will be enough technology to exploit oil at present unreachable. These reserves might meet the estimated gap of 2.8 billion tons expected in the year 2010. Oil demand is made up of two main categories, reducible and non-reducible. Reducible demand, namely fuel,

should fall sharply In the coming decades because of the estimated higher cost. But non-reducible demand, in particular where oil is used as a raw material, will grow rapidly. Demand for liquid hydrocarbons in the petrochemical industry 7 should continue to rise at about 8.5 per cent annually until 1990, rising to 750 million tons in 1990 from 220 million tons in 1975.

A sustained development of supplies can meet the demand but will be successful only if prices are increased gradually. Any sudden price rise will cause grave economic .crises around the world, the study says. It urges governments to enforce strict policies to conserve energy and to ensure that resources reach the priority areas of non-reducible usage. Prices alone will not be enough to achieve this optimal allocation. Consumption planning and internationally co-ordinated energy measures will be vital, the report says.—O.F.N.S. Copyright.