If crude prices don’t bounce back by the end of the decade, an era of cheap oil could consolidate more oil-market power into the hands of a few low-cost producers in the Middle East – raising concerns about energy security for oil-importing nations, the International Energy Agency says.
The IEA’s closely watched World Energy Outlook, an annual report being released Tuesday, said the world’s reliance on Middle Eastern oil exports could “eventually escalate to a level last seen in the 1970s,” most profoundly in developing Asian countries like India and China, if oil prices stay low well beyond 2020 and force higher-cost producers out of the market over the next 25 years. The Paris-based group, which consults 29 oil-importing nations, is a well-respected oil-market forecaster.
“It would be a grave mistake to index our attention to energy security to changes in the oil price,” IEA Executive Director Fatih Birol said in a written statement. “Now is not the time to relax. Quite the opposite: a period of low oil prices is the moment to reinforce our capacity to deal with future energy security threats.”
Plus, the world’s increased dependence on cheap oil could crowd out $800 billion in possible energy efficiency improvements in automobiles and aircraft by 2040, eliminating 15 percent of the efficiencies the IEA otherwise expects to see. In other words, technological advancements and policy prescriptions for renewable resources might not make as big an impact in the market if fossil fuels are cheaper to buy.
https://fuelfix.com/blog/2015/11/09/iea-cheap-oil-era-could-boost-reliance-on-middle-eastern-crude/