According to the International Energy Agency’s (IEA) latest World Energy Outlook (released in November), oil and natural gas will still supply over 50% of the world’s energy in 2040. But, given the tendency to overestimate the ability of naturally intermittent renewables to displace (not simply supplement) conventional fuel systems, the contribution of oil and gas is likely to be even higher than anticipated.
In short, even with Herculean growth for wind and solar, oil and gas will remain integral to the world’s energy economies for “as far as the eye can see.” Moreover, you must know that wind and solar only compete in the electricity sector, and electricity accounts for less than 45% of global energy demand. So, an energy system built on wind and solar isn’t practical: they don’t compete in the majority of the world’s energy economy.
To me, our most obvious energy fact is that global oil demand simply cannot peak anytime soon. Oil, after all, is the world’s most vital fuel with no significant substitute whatsoever. And because 6 in every 7 humans today live in undeveloped nations, global oil consumption has really just started. The numbers in oil’s favor are overwhelming: over 90,000,000 vehicles were sold last year, and about 1% of them run on something other than oil.
Natural gas, meanwhile, is the world’s fastest growing major fuel, and the increased use of natural gas is a climate necessity: more gas is the primary reason why the U.S. is set to meet CO2 emission reduction goals set in the Clean Power Plan nearly 15 years early (here).
Given all this, our expanding capacity to export more oil and natural gas is not just great to lower our trade imbalance, but to also improve human development. I’ve already documented how it’s a moral imperative to export modern fuels to a mostly poor world (here, here), and oil and gas exports also lower the widening influence of OPEC and Russia.
The foundation of my work stands on solid moral footing: poor people deserve the same privileged lives that you, me, and Al Gore have, and shouldn’t have to only rely on the less reliable, more expensive energy systems that rich people in San Francisco demand that they do.
As U.S. crude oil production has rebounded to levels not seen since the early 1970s, our petroleum and oil products exports have surged. We have a saturated market demand wise, so although demand will remain buoyantly very high, our ability to export is increasing as our industry recovers from sunken prices. And our shale oil is a lighter, higher quality oil that isn’t a perfect match for our own refinery system built on processing heavier crudes.
In 2018, the U.S. is set to become a net gas exporter on an annual basis for the first time ever. The coming U.S. LNG export surge means that we could someday soon become the largest LNG exporter. Countries want our gas given more flexible contracts and our use of hub pricing, where the more clear fundamentals of supply and demand reign. LNG and Mexican exports increases could total over 4 Bcf/day of new U.S. demand this year.
Domestic electricity and industrial use is not growing fast enough, so the U.S. gas business is shifting the focus toward international buyers. Our representatives should know that in times of slow domestic demand, exports allow our producers to maintain high employment levels. To illustrate, gas for power generation demand is expected to actually decline this year, after increasing by more than 3% last year. And IEA is encouraging us to export gas to displace coal in Asia, where gas prices 3-5 times higher give our companies huge arbitrage opportunities.
via Forbes.com: Energy News http://ift.tt/2mivDc9