IEA expects 'bumpy' 2012

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PARIS, March 8 (UPI) -- Energy markets in 2012 may be in for a "bumpy" year because of high demand for oil and concerns about alternatives, the IEA said.

Maria van der Hoeven, executive director of the International Energy Agency, writes in the OECD Observer that macroeconomic concerns have diverted attention away from energy policy. This, she stated, would have "worrying impacts" on oil prices and environmental issues.

She said the nuclear meltdown in Japan coupled with civil unrest in North Africa and the Middle East have heightened market concerns at a time with oil demand continues to grow.

"Demand estimates for 2012 are shrouded in economic uncertainty and some outstanding supply risks remain, such as the timing of the restoration of full Libyan oil production," she said. "Tight oil markets do not respond well to even small shocks, so 2012 may turn out to be bumpy."

Alternatives to oil, like natural gas, will start to play a larger role in the global energy mix, though environmental "or other concerns" could derail what she said could be a "golden age of gas."

"These short-term uncertainties do not bode well for climate change mitigation, underscoring the need for bold policy action," she added.