The Good Dr. Birol is Stealing My Thunder (Again)
Something happened this morning that reminded me of a few events from the recent past. So today seems a like good time to tell you a story.
It’s about Dr. Fatih Birol. I have known him for decades.
As Chief Economist of the International Energy Agency (IEA) in Paris, his views have had some impact in the shaping of worldwide attitudes on energy.
He is also hardly reticent in letting you know exactly what those views are, whether they reflect prevailing opinion or not – sometimes stealing your thunder in the process.
Several years ago, I learned that first hand…
While in London for a series of meetings, I received a phone call from one of Fatih’s staff members. “Dr. Birol is holding an interview with a newspaper,” they said, “would like you to attend?”
Well that’s something new, I thought…
The two of us had been having an ongoing disagreement over the IEA’s calculations. In fact, that same debate had animated several international conferences, leading me to think that some of the speaking invitations I had received were more intended to increase ratings than anything else.
After all, having a little high- intensity disagreement on stage never hurts attendance!
The First Scene In London
The difference of opinion was straight-forward enough. My view was that the Paris-based energy agency – representing the most advanced nations in the world – had continued to overemphasize the developed world in its numbers.
Put simply, the IEA was not giving adequate attention to the huge spike in energy demand that was underway elsewhere.
Of course, everybody understood the importance of China and the Asian continent in increasing overall energy requirements. My problem stemmed from the IEA discounting other areas where surging market and domestic needs were changing the energy landscape.
To my mind, the IEA was continuing to overweight its figures with results that were easier to calculate – namely, those coming from its own industrialized members.
There was also a corollary to this point.
In addition to problems on the demand side, I believed the IEA was overestimating the available oil supply. This was before the potential of unconventional oil (tight and shale) came upon the scene. This new volume is now transforming those estimates, turning North America into a self-sufficient continent, and fueling an amazing recovery in U.S. production.
But back then, we were still crunching numbers from more traditional fields and they looked far less promising to me than they did to the IEA.
In fact, the agency was completing a survey of the major fields worldwide, those accounting for some 80% of all conventional production. And Fatih was in London to announce the findings. This newspaper interview with The Independent I had been invited towas probably the first announcement.
On that basis, I could hardly refuse the invitation. I said yes and dashed out to hail a taxi. The newspaper’s offices at Northcliffe House just off Kensington Gardens were about 20 minutes away. Given the traffic, I would just make it.
After a few preliminary pleasantries, I sat in the corner and waited for what was coming next. The reporter began with some general observations and then asked the initial question. It was one of those “slow ball pitches,” meant to ease the guest into the subject matter.
“The IEA is about to release a much anticipated report on international oil production,” the reporter began. “What should we expect?”
Fatih looked at me, smiled, and responded. “We are moving into a full-blown crisis,” he declared. “There is apparently less available extractable crude in the world than initially thought.”
That would be the headline in the next edition. I almost jumped out of the chair. I was right all along, I thought, in a pointless round of self-congratulation.
At that moment, the reason for the invitation hit me square between the eyes. Dr. Birol had just won our debate by co-opting the opposition. He had just stolen my thunder!
It’s Déjà vu All Over Again
Well, this morning he did it again.
As readers of OEI are well aware, I have been talking about the stranglehold Russian natural gas imports have had on European energy prices for some time. My position has been to argue for Europe to develop unconventional shale gas, move into renewables, and increase the import of liquefied natural gas (LNG).
Each one of these will oblige Gazprom, the Russian natural gas behemoth, to revise its pipelined gas export prices.
The most recent exchange I had with Fatih on this matter was during my Moscow meetings last month. He again expressed his misgivings about shale in Europe, while I had the opposite opinion. We also disagreed about prompting Russian authorities into a rapprochement on energy policy.
But now it looks like he has changed his tune. Here’s the press release that emerged from Paris about 4 a.m. Pittsburgh time today:
“The International Energy Agency’s chief economist Fatih Birol says Europe faces at least another 20 years of high gas and electricity prices, and will lose a third of its global market share of energy-intensive exports, mainly to the U.S. with its newly abundant supplies of oil and gas. The dire prediction concerns 30 million people working in industries that consume a lot of energy, such as steel and petrochemicals. Right now, gas prices in Europe are three times as high as in the U.S., and electricity is twice as expensive for industrial consumers. European industrialists blame this on environmental subsidies meant to develop renewable energy sources, and Germany is already posed to scale back its green policies. The IEA, however, believes the problem is both simpler and harder to solve: High import prices on natural gas, mainly from Russia. The only way for Europe to reduce prices at this point is to work shale gas deposits and build nuclear power plants. One other way would be to seek political rapprochement with Russia, but that is hardly feasible given the EU’s vast ideological differences with President Vladimir Putin’s regime.”
Now I’m just waiting for the final shoe to drop. The good Dr. Birol has yet to say anything about LNG imports.
However, given our past experience, I expect that to come in short order.
Perhaps I should simply write copy for him?