We have to leave oil before oil leaves us, says Fatih Birol.

Question: You believe that the world will hit peak oil production in 2020. When that happens, what are the implications? 

Fatih Birol: Oil supply and demand can be tightened substantially in the next years to come. The conventional oil supplies may peak around 2020 if we do not discover new oil fields and if the oil demand grows as strong as it has been in the past. If we don’t do anything, if we just sit back and watch, it means if we don’t slow down the oil demand growth. If we don’t invest to find new oil fields we may see much higher prices than we have seen in the past and this could have very bad implications for the global economy, for all the countries in the world, major countries such as the US, China, all European countries, but as well as for the producing countries because oil is one of the major revenue generators. So what we have to do is on one hand we have to invest to find new oil fields. Second, perhaps much more importantly, is to slow down the oil demand growth and we can slow the oil demand growth finding solution to our transportation sector problems. We have to find cars. We have to use cars much more efficiently. We have to look at alternative technologies of cars such as bio fuels or even more importantly, electric cars. Oil sources are there as you said until 2020 and so on, but one day if not 2020, 2030, 2040, one day we will run out of oil. It’s a matter of time. So what we have to do is we have to prepare ourselves for that day and we have to leave oil before oil leaves us. 

Question: What should industry and business be doing to prepare for that day? 

Fatih Birol: Our first task is to postpone the day of peak and to do that we have to invest in oil fields and we have plenty oil mainly in the OPEC countries. In Middle East there is plenty of oil there. We have to see that investment is done in order to explore new oil fields and develop the existing fields. Second, industry and business need to look at the alternative option in the transportation sector. Today, more than 95 percent of the growth in oil demand comes from the transportation sector, namely cars, trucks and jets, so we have to find a way. Industry has to find a way together with the governments to find new modes, new modalities for transportation. This is our first task, to postpone the peak and then if we are well prepared for the day that global oil production goes down we can find solutions to the significant economic challenges we may face.