IEA Warns of Energy Supply Crunch

By Jane Wardell

LONDON (AP) -- The International Energy Agency on Wednesday predicted world energy demand will rise 1.6% a year on average between 2006 and 2030 and called for massive investment in energy infrastructure to prevent a supply squeeze.

The IEA's base scenario for energy demand has fallen because of the global economic slowdown and higher oil prices, but the agency stressed that a delay in spending on new projects because of the credit crisis could lead to a "supply crunch that could choke economic recovery."

The IEA expects demand for oil to rise to 106 million barrels a day in 2030, 10 million barrels a day less than projected last year, from 85 million barrels a day currently.

China and India continue to be the main drivers, accounting for more than half of incremental energy demand to 2030, but the Middle East, a longtime supplier, also emerges as a major new demand center.

The agency said that these trends call for energy supply investment of $26.3 trillion to 2030, or more than $1 trillion a year, but it noted that tight credit conditions could delay spending.

"While the situation facing the world is critical, it is vital we keep our eye on the medium- to long-term target of a sustainable energy future," Nobuo Tanaka, the Paris-based agency's executive director, told reporters at the release of its annual World Energy Outlook report in London.

The Organization of the Petroleum Exporting Countries, which pumps about 40% of the world's oil, cut output by 1.5 million barrels a day from Nov. 1 to counter a recent fall in the price of crude from a high of $147 in July to about $59 on Wednesday.