A Paris-based autonomous intergovernmental organization has provided a dire forecast regarding a potential energy crisis.
The demand for oil has the potential to surge to half a million barrels per day and with an already ongoing worldwide energy shortage, the International Energy Agency (IEA) has stated this could enhance inflation and in the process put a damper on economic recovery from the pandemic, it was reported in the Economic Times.
“Record coal and gas prices, as well as rolling blackouts, are prompting the power sector and energy-intensive industries to turn to oil to keep the lights on and operations humming," the IEA said in its monthly oil report. "Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery."
The U.S. Bureau of Labor Statistics reported that inflation in America was at 5.4% year over year in September, with gasoline and energy being two sectors that had a big impact on the inflation percentage.
The demand for oil is not expected to return to pre-pandemic levels until sometime next year and recent demand has followed the biggest pull from oil product stocks in the last eight years. According to Reuters, OPEC storage levels are at lows not seen since 2015.
"Provisional August data already indicates that there is some unseasonably high demand for fuel oil, crude and middle distillates for power plants across a number of countries, including China, Japan and Pakistan in Asia, Germany and France in Europe. and Brazil," the IEA said.
It is expected that OPEC will pump about 700,000 barrels per day less than what is being needed until the end of the year, Reuters reported.
President Joe Biden has asked the oil industry to quell gas prices that have continued to rise over the past several months. Stephen Brown, current strategist with RBJ Strategies, told Politico, “Some producers will talk to them, but it is also not like they have a lot of friends in this sector.”
“To ensure we have a stable and affordable supply of energy here in the United States, the Biden Administration should support the domestic production of oil and natural gas, ensure the continued production on federal land, work with the industry on sensible and smart methane regulations, and stop calling for higher taxes on the American oil and gas industry,” Anne Bradbury, chief executive of trade association American Exploration and Production Council, said in a statement.