The release of the World Energy Outlook (WEO) is crucial for policymakers, energy companies, and investors making significant financial decisions worldwide. Published annually by the International Energy Agency (IEA), the WEO serves as a leading authority on energy data.
• The IEA was established in 1974 to provide better insights into oil and gas demand following the 1973 OPEC oil embargo.
• The WEO included a Current Policies Scenario (CPS) which helped forecast energy demands based on existing laws and policies until it was phased out in 2020.
• The shift away from the CPS was influenced by pressure from European nations and environmental advocates, focusing on ambitious climate policies.
• This led to expectations of declining oil demand by 2030, undermining investment in fossil fuels.
• In 2025, the IEA reinstated the CPS after pressure from the Trump administration but acknowledged a potential peak in demand not occurring until 2050.
• Critiques of the IEA indicate persistent unrealistic assumptions in forecasts for electric vehicle adoption, aviation fuel, and marine shipping, which may lead to significant underinvestment in oil and gas exploration.
• This underinvestment could cause supply shortages and increased energy prices.
The IEA’s forecasts and decisions have seriously affected the investment climate in energy resources. As past shortages led to economic crises, current trends may similarly precipitate future energy price spikes, highlighting the importance of accurate demand forecasting in the energy sector.
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