The need for a 40% global increase in energy production by 2030 is likely to be shortchanged by a combination of declining production and political instability.

It's a shame that the banana peels beneath our feet are likely to cause us to fall before we discover their presence. I'm referring here to the precarious state of the world's energy supply-demand balance, a situation comprised of a dangerous one-two-three punch of declining production in many locations, steadily higher global demand, and increasing instability in many of the places where the biggest energy reserves are found. 

My purpose here is to provide a broad look at this serious problem, and then to offer up a seemingly viable solution.

First things first
Let me emphasize that my intention is not simply to don a Chicken Little costume and frighten or depress my Foolish friends. But I sincerely believe that a consideration of both the nature of the problem -- and a look at a possible solution -- is warranted.

The world today produces the equivalent of about 85 million barrels of oil per day and consumes about that same amount. But as is predicted by most energy prognosticators, including the Energy Information Administration arm of the U.S. Department of Energy and such private forecasters as ExxonMobil (NYSE:XOM), daily demand is likely to jump to about 120 million barrels by 2030, or more than 40% above the current rate.

It's frustrating to note the general lack of understanding of what's implied by the need to wring 35 million more barrels of oil daily from the world's producing horizons in little more than a couple of decades. In fact, I seriously doubt the additional output can be achieved.

Old and tired
Let's start with the concept that wells don't produce at the same rate forever, and that many of the world's biggest fields are tiring and are yielding less and less oil, almost by the day. Nowhere is that concept more apparent than in North America's "lower 48," and in Alaska, the North Sea, Mexico, and possibly even Saudi Arabia, oil's big enchilada. Indeed, because many of the world's largest fields were discovered before the 1970s, it's now tough to point to a major producing area that hasn't already seen its best days. Total U.S. production, for instance, has declined by about 20% in just the past decade.

And so revving the world's daily production up to 120 million barrels will involve first compensating for current fields' output declines, and then -- in an era of fewer and fewer big discoveries -- finding enough new oil to move the meter up by nearly half. If the technical challenges involved in doing all that aren't enough, we have to face the fact that, for whatever perverse reasons, oil's biggest deposits have been buried in places where political instability is the order of the day.

Take Nigeria, for instance. This West African member of OPEC can produce nearly 2.5 million barrels of oil per day and is the fifth-largest exporter of crude oil to the United States. Nevertheless, that nation more and more has become paralyzed by kidnappings and other forms of sectarian violence. As a result, Royal Dutch Shell (NYSE:RDS-B) (NYSE:RDS-A) currently has nearly 200,000 barrels per day of production shut in there, Korean Daewoo has evacuated about 200 of its employees from Nigerian construction projects, Italian producer Eni (NYSE:E) has declared an inability to meet contracts to produce more than 90,000 barrels of oil daily, and as recently as Friday Chevron (NYSE:CVX) pulled workers from southern Nigeria.

And then there's Venezuela, which stacks up as the third-largest supplier of crude and product to the U.S. and produces about 2.1 million barrels of crude oil daily. That nation's president is implementing a nationalization program that has resulted in such major energy companies as Exxon Mobil, Chevron, ConocoPhillips (NYSE:COP), and BP (NYSE:BP) being shooed away from their operating positions in the technologically tricky Orinoco basin in favor of Venezuela's oil company.

I don't have to tell Fools about the precarious circumstances in both Iran and Iraq, which between them produce about 6 million barrels of crude oil daily. Iran has been a thorn in the side of the U.S. since the shah was driven out in the late 1970s. And relative to war-torn Iraq, it seems to me that an abrupt departure of U.S. forces from that nation -- however justified otherwise -- could have a spillover effect that would endanger its production, that of Iran, and potentially that of much of the rest of the Middle East.

The rich get richer
I could, of course, mention a host of other nations, from Algeria to Mexico, where either for technological reasons or because of shaky politics, future production levels are anything but guaranteed. Indeed, the one trump card in energy seems to be held by Russia, where production has jumped by 60% -- to nearly 9.5 million barrels a day -- in just the past decade, but whose tensions with he U.S. again are increasing. Russian oil and gas are now found in such garden spots as remote Sakhalin Island, off the nation's East Coast, where ExxonMobil is leading a technologically sophisticated production effort. Exxon's operations are occurring near where Royal Dutch Shell was far less successful and consequently has surrendered much of its interests to Gazprom, one of the nation's energy companies.

But it seems to me that it'd be naive to assume Russia's energy growth won't ultimately become a mixed bag -- or worse -- for U.S. consumers. Last week, The Wall Street Journal reported that ExxonMobil's relationship with Russian authorities has become progressively more contentious as the taxes levied against the company have escalated steadily and permits for facilities expansions have started to be issued far more grudgingly.

All these supply machinations are occurring in the face of a nearly 270% demand increase in China since 1980 -- a 33% hike just since 2000 -- and a more than 280% demand jump in India in the past two and a half decades. Indeed, projections of steeply escalating world demand for as far as the eye can see are based largely on expectations of a voracious thirst for oil in many developing nations.

Sitting here -- probably looking a bit ridiculous -- in my aforementioned Chicken Little costume, I could continue to work my way through a laundry list of items that I believe are contributing to our dangerous energy circumstances and even to the potential demise of our civilization. For instance, I could talk about the Detroit automakers' inability to respond effectively to our plight, to the ineffectiveness of new technologies in reversing the decline in U.S. energy production, or to the need for the energy industry to range progressively more widely (and more deeply) just to maintain current production.

In the second part of this series, I'll attempt to offer a viable solution to these problems, known as the Manhattan Project for Energy. I hope you'll move to it and read on.

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Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Motley Fool has a disclosure policy.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.