2005 Changing the Oil Economy

8/14/2019 2005 Changing the Oil Economy

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Changing the Oil Economy

State of the World

Worldwatch Institute


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The Oil Economy

Strategic commodity Economic security

Civil security

Climate security Alternatives

Courtesy Elmendorf AFB

The Oil Age fueled the 20th

CenturyHow does it affect global security?


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Oil in Modern Life

Cars and power plants

Personal care products,cosmetics and drugs

CDs, cell phones, radios,

cameras, TVs

Clothing, sports, householdfurnishings

Food production and

transport

How wide spread is our oil-basedculture?


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A Strategic Commodity

Oil is central to modern civilization It is the worlds largest source of energy

Oil has changed from an asset to a liability Oil is key to manufacturing, feedstock and energy

and there are no ready substitutes

Oil dominates world energy budgets Per capita and total energy consumption

skyrocketed once fossil fuels became widely

available


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From Wood to Oil

0

5

10

15

20

25

30

35

40

1630 1680 1730 1780 1830 1880 1930 1980 2030

U.S. Consumption, 1630-2000Quadrillion Btu

Source: DOE

Petroleum

Natural Gas

Nuclear Electric Power

Hydroelectric Power

Coal

Wood


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Consumption

World Oil Consumption, 1950-2004

Source: BP

0

10

20

30

40

50

60

70

80

90

1950 1960 1970 1980 1990 2000 2010

M

illionBarrels


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China

China exported oil in the early 90s Today, it is the worlds second largest importer

0

1

2

3

4

5

6

7

1970 1980 1990 2000

Millio

nBarrels/Day

Production

Consumption

Source: DOE


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Consumption

Global consumption of useful energyper person is about 13 times higher

than in pre-industrial times

Per capita consumption is muchhigher in industrial than developing

nations

Consumption has risen despite

increasing pollution, emissions

and other problems USDA


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Transportation

The worlds automobile fleet

grew from 53 million in 1950

to 539 million in 2003

China, with an expanding

economy, now has 20 millioncars and trucks and by 2020

is projected to have a fleet of

120 million

Automobiles

Digital Vision

Oil accounts for nearly all transportation energy use


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Transportation

Air travel has increased

dramatically since jets were

introduced

1950: 28 billion

passenger-km

2002: 2,942 billion

passenger-km

Air Travel

NASA


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Supply

Conventional view--production will keep rising

IEA projects production will reach 121 million barrels

per day

Sufficient oil reserves exist and new technologies willaid in better extraction

DOE


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A Finite Resource

Dissident view--production will begin to decline by2007

Gap between supply and demand will continue to grow

New technologies will only accelerate rate of depletion

Production has outrun discovery for past three

decades

Getty Images


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Discoveries

World oil discoveries are lagging far behind production

0

10

20

30

40

50

60

1920 1940 1960 1980 2000 2020

Discoveries

Production

BillionBarrels


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Production & Resources

BillionBarrels

Source: DOD, DOE

0

5

10

15

20

25

30

1500 1700 1900 2100 2300 2500

Historical Production

Estimated Resources

According to many geologists, resource constraintsmay soon limit world oil production


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Falling Production

6 of OPECs 11 members

United Kingdom

Indonesia

Norway

Mexico

Venezuela

Getty Images

Production has reached a plateau or declined in 33of the 48 largest producers, including:


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0

2

4

6

8

10

12

14

1950 1960 1970 1980 1990 2000 2010

MillionBarrels

Oil Production

United States

Former Soviet Union

Saudi Arabia

Production Per Day

Source: BP


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0

2

4

6

8

10

1955 1965 1975 1985 1995 2005

U.S. Production

Million Barrels Per Day

Source: DOE

Lower 48 states

Alaska

U.S. oil production peaked in 1971


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Dependency

Industrial nations use most of the worlds oil

Developing nations

Are more dependent on oil as share of total energy use Use more in proportion to the size of their economies

Many import virtually all their oil

Are more vulnerable to price shocks than many

industrial nations


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0 10 20 30 40 50 60 70 80

Dependency

Percent of Oil in Energy Budgets

Ecuador

Thailand

Japan

U.S.

France


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Paying the Price

DollarsPerB

arrel

Two decades of stable oil prices have abruptly ended.Is this a temporary anomaly?


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Human Cost

Price increases translate into human cost in poorcountries

rising food costs affect diets

cooking fuel becomes less affordable

FAO UN


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Price and Economic Growth

IEA estimates that if the price per barrel price increaseis sustained, it will reduce economic growth throughout

the world in 2006

0 1 2 3 4 5 6

Percent Reduction inEconomic GrowthU.S.

Europe

India

Indebted

countries

1.0

1.6

3.2

5.1


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World Oil Trade, 2002

Exports, MBD

< 11-22-45-6

6-9


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World Oil Trade, 2020

Exports, MBD

< 11-22-45-6

6-98.8

1970 1980 1990 2000 2010 2020

Trillion

Ton-Miles5.6 8.3 6.3 7.1 8.8 12.9


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Uncertainty

Growing demand will increase dependence on

supplies from the Middle East

Oil-producing countries are often politically unstable

True state of reserves in Persian Gulf, particularly

Saudi Arabia, are in question

Countries such as China and India are entering into

oil-intensive development and will intensify competitionfor oil

Competition will trigger soaring prices


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Oil and Civil Society

Access to oil has provoked

power maneuvering, military

interventionism, and alliances of

convenience

Oil resource wealth has tended

to support corruption and conflict

rather than growth anddevelopment

Lance Cpl. Nathan Alan Heusdens


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Oil and Climate

Global consensus thatEarth is warming and

that deforestation and

the burning of fossil

fuels are the majorcauses of climate

change

Oil contributes 42% of all emissions of carbon

dioxide (CO2) emissions, a greenhouse gas

Digital Vision


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Temperature Changes

The global average temperature is already higher than atany time since the Middle Ages

13.0

13.4

13.8

14.2

14.6

15.0

1860 1880 1900 1920 1940 1960 1980 2000

DegreesCelsius

Source: Goddard Institute for Space Studies (GISS)


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0

100

200

300

400

1980-84 1985-89 1990-94 1995-99 2000-04

Weather Disasters

The economic cost of weather-related catastrophes

Source: Munich Re

Billion Dollars

Uninsured Losses

Insured Losses


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The Tipping Point

We may already be in the early

stages of a global energytransition

One that is as profound as the

advent of the oil age was acentury ago.


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Improving Efficiency

Improving automobile fuel economy can

make an enormous difference

Gasoline and diesel-electric hybrid cars are

twice as efficient as internal combustion

engines


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Renewable Energy

Wind- and solar-generated electricity are

the fastest growing

sources of energy in the

world

Biomass fuels such asethanol and biodiesel are

proven and competitive with

gasoline and diesel


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Wind

Wind energy is becoming a major part of the global powerindustry

Megawatts

Source: BTM Consult, EWEA, AWEA, Windpower Monthly and New Energy

0

10,000

20,000

30,000

40,000

50,000

60,000

1980 1985 1990 1995 2000 2005


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Biofuels

Biofuels are joining the bandwagon

MillionLite

rs

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1980 1985 1990 1995 2000 2005


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Policy Changes

1) Ensure that energy markets include renewable

options

Enact pricing laws to guarantee fixed minimum

prices for electricity

Require that utilities provide access to grids

Establish quota systems mandating a share for

renewables


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Policy Changes

1) Focus on industry standards, permits and

building codes

Ensure quality hardware Address public concerns

about siting

Design new buildings to

be compatible withrenewables


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Policy Changes

1) Educate investors

and consumers

Ensure a skilled

workforce

Increase public

participation


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Choices

World Energy Use

Source: Martinot, BP

0

5

10

15

20

25

30

35

Oil

Ot

her

Rene

wabl

es

Nucle

ar

Hydr

o

Trad

ition

al

Bio

mass

Natu

ral

Ga

sCoal

% 2004

h


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Choices

0

5

10

15

20

25

30

35

Hydr

o Oil

Nucle

ar

Win

d

Biof

uels

Gas

Trad

ition

al

Biom

ass

Coal

Solar

PV

Source: Martinot, BP

World Energy Growth (2002-2004)

Annual PercentGrowth Rate

h d h ?


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What do you choose?

One path leads to the

possible calamitous loss of

a prime energy source

The other path leads toward a

world of abundant clean

energy for more of the worlds

people

W ld h I i


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Worldwatch Institute

Further information andreferences for the material in this

presentation are available in the

Worldwatch Institutes publication

State of the World 2005

www.worldwatch.org

This presentation is based on a

chapter authored by:

Thomas Prugh, ChristopherFlavin, and Janet L. Sawin

Documents

2005 Changing the Oil Economy