By Ami Sampat
The International Energy Agency has released a report describing a challenging future ahead for the energy industry and planet. The IEA’s annual World Energy Outlook highlights an uncertain future shaped by tightening oil supply, higher energy prices, and rising emissions of greenhouse gases.
Why is this important to the future?
The world primary energy demand is growing at a rate that is slower than was projected last year but fundamental long term challenges still need to be addressed. While oil prices have temporarily dropped in recent weeks, the longer term price of oil is expected to rise as demand grows from 85 million barrels a day to 106 billion barrels by the year 2030. The demand for coal is also rising as the primary source for producing electricity as the amount of energy consumed in the world’s cities rises from two-thirds to three-quarters by the year 2030.
The rapid change of these figures calls for an energy supply investment of almost $1 trillion a year. A trillion dollar investment in energy supply will certainly be hard to come by in today’s economy, where every dime is being spent to repair the damages that have occurred in the last few weeks.
Nobuo Tanaka, Executive Director of the IEA says. “A sea change is underway in the upstream oil and gas industry with international oil companies facing dwindling opportunities to increase their reserves and production. In contrast, national companies are projected to account for about 80% of the increase of both oil and gas production to 2030.”
The future of reliable low cost oil supplies is still very uncertain. While it will remain the world’s number one source for energy, the source of oil, the cost of producing it, and the prices consumers pay will be fluctuating. One thing that is certain: the days of cheap oil are no more.
What to Watch
“Rising imports of oil and gas into OECD regions and developing Asia, together with the growing concentration of production in a small number of countries, would increase our susceptibility to supply disruptions and sharp price hikes. At the same time, greenhouse-gas emissions would be driven up inexorably, putting the world on track for an eventual global temperature increase of up to 6°C,” states Tanaka.