As much as I admire the folks at ExxonMobil
The world's biggest publicly owned oil company begins its forecast with the realization that "the world's economy literally runs on energy." It then proceeds to project that between now and 2030 -- a time not really that far away -- the world's demand for liquid fuels (mostly oil) will increase from the current 86 million barrels a day to about 116 million barrels.
That works out to a compounded annual growth rate of about 1.3%, driven largely by transportation and industrial demands, much of it in developing nations. At the same time, in part because it's far cleaner burning, natural gas demand is expected to rise at an annual rate of about 1.7%, while, owing to its "high carbon intensity," yearly growth in the demand for coal is likely to be less than 1%.
For those who are green
Those with a green bent will be pleased to know that the Exxon forecasters expect "modern" renewables like wind, solar, and biofuels to grow at rates around the high single digits. The difficulty is that, despite a percentage growth rate that clearly dwarfs the annual advances of oil, by 2030, according to the company, wind and solar will still only account for about 1% of global energy usage, a figure that doubles to 2% if you add in biofuels.
So, you're sitting there thinking that these projections seem relatively modest. Surely, we can add just over a single percentage point to our annual oil output to hit that 2030 bogey of 116 million barrels a day. The difficulty, as The Wall Street Journal pointed out earlier this week, is that there's a growing school of thought that we may not be able to get anywhere close to 116 million barrels a day -- ever. It may just be that we're at or near the limits or our ability to wring more oil from the land, the ocean, tar sands, and shale.
This less optimistic view -- which ExxonMobil doesn't hold -- is shared by the likes of Christophe de Margerie, CEO of France's Total SA
Tired old wells
And that's not solely a contrarian French outlook. James Mulva, the CEO of ConocoPhillips
However, what I believe is the bigger problem is geriatric wells. The difficulty is that, if global demand continues to grow unchecked -- and it probably will -- and those who believe that production won't be able to match it (an expanding group that includes yours truly) are right, the consequences will surely be severe. This would include nations pitted against nations in confrontations more serious than skirmishes within the United Nations.
Leadership vacuum
But even given the potentially world-altering seriousness of this issue, the complete lack of leadership and attention it's received in Washington, D.C., is probably not surprising. Many in the Congress would love simply to tax the big oil companies into oblivion, and, for its part, the administration has been devoid of meaningful proposals on the problem. It does seem, however, that through the paper's very standing, the Journal article may importantly have moved the topic from something of a whispering fringe issue to a more generally accepted possibility.
For my money, I've suggested an energy convocation comprised of leaders from industry, academia, and government, much like the Manhattan Project that so swiftly developed atomic weaponry during World War II and ultimately brought the war to an end. But for the money of my Foolish friends, I continue to like many energy names, especially natural gas and oilfield services players like the aforementioned Schlumberger, Halliburton
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