The customarily cheery International Energy Agency (IEA), created to advise the member nations of the Organization for Economic Co-operation and Development (OECD), has taken a more somber tone in its latest annual World Energy Outlook released today. The agency dismisses the wildly hyped shale-oil and -gas “boom” in the United States as a band-aid on a malignant tumor, a temporary mask distracting the world from the pervasive illness afflicting its oil supply.

Just to keep up with expected growth in demand from developing countries (China, India, Brazil, to name the biggest ones), and to replace exhausted wells and fields, the IEA says will soon require the investment of nearly a trillion dollars a year. With the world price of oil unusually low and the cost of finding and delivering new sources of oil higher than it has ever been, there is simply no conceivable source for that kind of money.

In the good old days — a month ago — when oil was holding at $100 a barrel, the major oil companies were already cutting back drastically on their capital expenditures, or capex, which is their name for funding the search for new sources of oil. They were in effect giving up, because they had tripled their capex spending over the previous decade without significant results. An oil company that is not constantly finding new sources of oil is a company in liquidation. And that’s where they were before oil dropped below $80.

In the US oil patch they are still throwing confetti in the air and blowing tin horns about America’s fracking renaissance, insisting they can drive on through this little price deviation toward American energy independence, but in the background you can hear the thuds of oil derricks hitting the ground — being laid down by companies that cannot afford to keep them going. [See Shale Drillers Idle Rigs From Texas to Utah Amid Oil Rout, Bloomberg News Nov. 7. and Oil Below $80: The First Shoes Drop, Forbes Nov. 4.)

Extravagant predictions that other parts of the world will soon enjoy a boom in fracked oil, says the IEA report, are not realistic. With few identified shale-oil deposits, with environmental opposition at a fever pitch almost everywhere, and with most countries lacking infrastructure — pipelines, rail capacity, and the like — the fracking movement is failing to thrive anywhere else.

When one discounts the significance of the fracking boom and looks over the rest of the world’s oil supply, the prognosis gets grimmer, faster. Virtually every conventional oil field in the world is in decline, and many of them in the Middle East, North Africa and South America are in danger of disruption by social unrest. This is how the IEA sums it up:

“The global energy system is in danger of falling short of the hopes and expectations placed upon it. The short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers.”

In other words: Brace for Impact.