For a while there late last year it looked as though the international oil price was high and heading higher, with the Paris based International Energy Agency announcing in October that “expensive energy is back”.

It’s dangerous to regard your local servo as a litmus test for global energy prices, but since then the price of unleaded petrol in Australia’s major cities has dropped by more than 20 cents from $1.59 to $1.38 a litre.

We’re back to only grumbling slightly about fuel prices. So what happened?

I’m as interested as anyone, having highlighted the high price of fuel for Switzer Daily on October 24 based on the fact that global oil supply was only just running ahead of demand at 100.2 million barrels a day against supply of 100.1 million barrels.

It now turns out that the US is heading for the status of being the second biggest exporter of oil in the world after Saudi Arabia, thanks to the shale revolution, according to the IEA’s hot-off-the-press  “Oil 2019 Analysis and forecast to 2024”.

The new report says that the US increased its liquids (as in oil) production in 2018  by a record 2.2 million barrels a day and that what’s more, the US will account for 70% of the increase in global production capacity between now and 2024.

“Towards the end of forecast, US gross exports will reach 9 million barrels per day,” says the new report, “overtaking Russia and catching up on Saudi Arabia.”

Clearly this is taking a more objective view than the research I saw late in 2018, which wouldn’t of course have been able to include a US production figure for the year.

Perhaps the development that wrong-footed the IEA the most in recent years has been that OPEC, the producer cartel assembled in 1974, is no longer the source of extra “swing” production to meet higher demand, while a raft of non-OPEC countries such as Norway, Brazil, Canada and most recently Guyana, will add another 2.6 million barrels of oil a day in the next five years. Add that total to the US production numbers and you get an increase of 6.1 million barrels a day, all from non-OPEC countries, by 2024.

The IEA was founded in 1974, by the way, to monitor the newfound strength of the traditional middle eastern oil producers, so you can see that the oil production boot appears to have changed feet.

Of that 6.1 million barrel increase, 70% or a whopping four million barrels a day will come from the US.

Back in October the IEA was assuming that most of the increase in US production would be eaten up by consumption, which is the biggest in the world at 20 million barrels a day, but its latest report estimates that by 2024 the US gross exports will come to 9 million barrels a day.

Because of different grades it also imports a lot of oil, particularly from Canada, so don’t confuse net with gross.

By comparison the old OPEC producer group includes current laggards like Iran and Venezuela which are actually going backwards because of sanctions. Net net, as they say, it means that OPEC’s effective production capacity is expected to actually drop by 0.4 million barrels a day by 2024.

You won’t need to take your shoes and socks off to see that global oil production  is expected overall to increase by 5.7 million barrels a day by the end of the five year forecast. That’s less than demand, as you will see.

Of course a lot can go wrong between now and then but that’s an increase of more than one million barrels a day, per year.

So what about demand?

If we’d been expecting demand to peak thanks for instance to the wholesale adoption of electric cars, we’ll be disappointed. The IEA understandably points to China and India as the source of much demand growth, noting that any reduction in industrial demand in those countries is more than made up for by increased consumer activity, i.e. cars.

The new report interestingly expects new oil demand to outstrip new supply by 7.1 million barrels a day versus 5.7 over the five year forecast period, but the monitoring group seems pretty sanguine about that imbalance.

You could be forgiven for thinking the IEA really doesn’t know what demand is going to look like, because it has to be harder to predict than supply. There are even more variables than with supply, which tends to be tailored to demand anyway. The best takeaway from that is to assume that petrol prices are much more likely to rise than fall by 2024.

We do know that the rise in demand for jet fuel, particularly in Asia, is going to join with extra demand for petrochemicals for plastics et cetera (remember them?) to push demand out further.

The global market for jet fuel is currently around 7.45 million barrels a day but that will reach more than 9.5 million barrels a day by 2040.

And electric cars? Sales are moving up but they still only represent a small percentage of sales overall, never mind the existing vehicle fleet.

Global sales of plug-in electric cars were estimated at 2.1% of new car sales in 2018, but once you include existing fleets the total ratio is about one plug-in electric car per 250 cars on the road.

Interestingly, China has the biggest stock of plug-in cars and light goods vehicles with over 2 million of them now on their roads, and that will of course rise.

Where’s Australia in all of this? Not only are we pretty much of a rounding error but we long ago ceased to be oil exporters, thanks to the gradual run down of Bass Strait reserves.

The latest set of numbers I could extract from Australia’s Department of Energy show that we’ve just dropped below production of 100 million barrels a YEAR to 98 million for the year to June 30 2018, versus for instance 161 million for the same period in 2010-11.

And that’s even including condensate, the liquid that comes up with natural gas. Take that out and the total drops by almost half.

Conclusion: we’re going to have to get used to being out on a limb as regards our oil needs. The only consoling thought I could find in the IEA report was its note that ongoing fuel efficiency is going to slow the global rate of growth in petrol demand to less than one per cent a year overall. But that will be dwarfed by petroleum use growth in developing countries, up two per cent a year.