US EIA gets religion

Sort of


Guy Caruso: ``clearly a major change''

The presentation given yesterday by Energy Information Administration (EIA) director Guy Caruso and broadcast by CSPAN-2 was very worthwhile and informative. An audio file and pdf of the visuals are available from the Center for Strategic and International Studies (CSIS) here.

Of the many striking revisions in 2006 of past versions of the EIA's Annual Energy Outlook (AEO), I display just one of them above--the projection to 2030 of the oil price in constant dollars. Apparently the events of 2005 have completely shaken the forecasters. They were so very, very wrong just one year ago.

Why? Here is where the new EIA religion gets a little fuzzy. Caruso thinks that any supply problems are related to the cost of exploring for new oil. Of peak oil, Caruso says,

There's a lot of attention being paid to the peak oil issue in the media and trade press. Our view is that the, although ... it's something we take seriously and look at very closely, and work very closely with the USGS and others within the US government who make resource assessments, we don't see peak oil being the driving force leading to these higher-price assumptions, and we don't see oil resources being constrained on the supply and demand outlook that we are now projecting for not only the US, but globally.

EIA and other government agencies take it seriously. Good. But I think Caruso's denial of peak oil versus acceptance of exploration/new oil development cost as the major factor constraining supply expansion is a distinction without a difference. I believe that EIA and the agencies responsible for resource modeling need to take the writing on the wall even more seriously.