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Times 2 Nov 07
Energy demand heightens risk of global slowdown, says expert
LONDON - 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 has warned.
The unusually stark warning by Dr Fatih Birol, the chief economist of the International Energy Agency, about the effect of Asia'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, Dr Birol said on Wednesday he had experienced 'an earthquake' in his thinking.
'China plus India are going to dominate growth in the oil markets,' Dr 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 had come 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.
'We may see very high prices that will come to a level where the wheels may fall off,' Dr Birol said. 'I definitely believe that if prices stay at these levels, there will be a slowdown of the global economy.'
Dr 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 cutting emissions.
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.
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 US 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, 'we may see price levels much higher than we conventionally believed in the past', Dr Birol said.
NEW YORK TIMES
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