Transcript Slide 1

Changing the Oil Economy
State of the World
Worldwatch Institute
The Oil Economy
The Oil Age fueled the 20th Century
How does it affect global security?
•
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Strategic commodity
Economic security
Civil security
Climate security
Alternatives
Courtesy Elmendorf AFB
Oil in Modern Life
How wide spread is our oil-based
culture?
• Cars and power plants
• Personal care products,
cosmetics and drugs
• CDs, cell phones, radios,
cameras, TVs
• Clothing, sports, household
furnishings
• Food production and
transport
A Strategic Commodity
• Oil is central to modern civilization
• It is the world’s 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
From Wood to Oil
U.S. Consumption, 1630-2000
Quadrillion Btu
40
35
Petroleum
30
Natural Gas
25
Nuclear Electric Power
20
15
Hydroelectric Power
10
Coal
5
Wood
0
1630
Source: DOE
1680
1730
1780
1830
1880
1930
1980
2030
Consumption
Million Barrels
World Oil Consumption, 1950-2004
90
80
70
60
50
40
30
20
10
0
1950
Source: BP
1960
1970
1980
1990
2000
2010
China
• China exported oil in the early 90’s
• Today, it is the world’s second largest importer
7
Million Barrels/Day
6
5
Consumption
4
3
Production
2
1
0
1970
1980
1990
2000
Source: DOE
Consumption
• Global consumption of useful energy
per person is about 13 times higher
than in pre-industrial times
• Per capita consumption is much
higher in industrial than developing
nations
• Consumption has risen despite
increasing pollution, emissions
and other problems
© USDA
Transportation
Oil accounts for nearly all transportation energy use
Automobiles
– The world’s automobile fleet
grew from 53 million in 1950
to 539 million in 2003
– China, with an expanding
economy, now has 20 million
cars and trucks and by 2020
is projected to have a fleet of
120 million
Digital Vision
Transportation
Air Travel
Air travel has increased
dramatically since jets were
introduced
– 1950: 28 billion
passenger-km
– 2002: 2,942 billion
passenger-km
© NASA
Supply
• Conventional view--production will keep rising
– IEA projects production will reach 121 million barrels
per day
– Sufficient oil reserves exist and new technologies will
aid in better extraction
© DOE
A Finite Resource
• Dissident view--production will begin to decline by
2007
– 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
Discoveries
World oil discoveries are lagging far behind production
60
Discoveries
Billion Barrels
50
40
Production
30
20
10
0
1920
1940
1960
1980
2000
2020
Production & Resources
According to many geologists, resource constraints
may soon limit world oil production
30
Billion Barrels
25
Historical Production
20
15
Estimated Resources
10
5
0
1500
Source: DOD, DOE
1700
1900
2100
2300
2500
Falling Production
Production has reached a plateau or declined in 33
of the 48 largest producers, including:
–
–
–
–
–
–
6 of OPEC’s 11 members
United Kingdom
Indonesia
Norway
Mexico
Venezuela
© Getty Images
Oil Production
Production Per Day
14
Former Soviet Union
Million Barrels
12
10
United States
8
6
4
Saudi Arabia
2
0
1950
Source: BP
1960
1970
1980
1990
2000
2010
U.S. Production
U.S. oil production peaked in 1971
10
Million Barrels Per Day
8
Lower 48 states
6
4
2
Alaska
0
1955
1965
1975
1985
1995
2005
Dependency
• Industrial nations use most of the world’s 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
Dependency
Percent of Oil in Energy Budgets
Ecuador
Thailand
Japan
U.S.
France
0
10
20
30
40
50
60
70
80
Paying the Price
Two decades of stable oil prices have abruptly ended.
Is this a temporary anomaly?
Dollars Per Barrel
Human Cost
Price increases translate into human cost in poor
countries
– rising food costs affect diets
– cooking fuel becomes less affordable
© UN
© FAO
Price and Economic Growth
IEA estimates that if the price per barrel price increase
is sustained, it will reduce economic growth throughout
the world in 2006
Percent Reduction in
Economic Growth
1.0
U.S.
1.6
Europe
3.2
India
Indebted
countries
5.1
0
1
2
3
4
5
6
World Oil Trade, 2002
Exports, MBD
<1
1-2
2-4
5-6
6-9
World Oil Trade, 2020
Exports, MBD
<1
1-2
2-4
5-6
6-9
Trillion
Ton-Miles
5.6 8.8
8.3
6.3
7.1
8.8
12.9
1970 1980 1990 2000 2010 2020
Exporter Dependency
• Exporters rely on a
continuous stream of oil
revenues because their
economies are not
diversified
• Oil income is often
diverted to enrich elites
and to pay for military
buildup
© Getty Images
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 competition
for oil
• Competition will trigger soaring prices
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 and
development
© Lance Cpl. Nathan Alan Heusdens
Oil and Climate
Global consensus that
Earth is warming and
that deforestation and
the burning of fossil
fuels are the major
causes of climate
change
Digital Vision
Oil contributes 42% of all emissions of carbon
dioxide (CO2) emissions, a greenhouse gas
Greenhouse Gas
Atmospheric concentration of carbon dioxide is now higher
than at any time in the last 650,000 years
400
Parts Per Million
380
360
340
320
300
280
260
1850
1870
1890
Source: Scripps Institute of Oceanography
1910
1930
1950
1970
1990
2010
Greenhouse Gas
Past and future CO2 concentration
Source: IPCC
Climate Change
Scientists project that rising
temperatures will:
– melt ice caps and glaciers,
raise sea levels, and
increase storm severity
– trigger regional droughts
and famines
– lead to the spread of
diseases like malaria and
dengue fever
– affect the growth and
harvest of world food crops
Glaciers are already melting
Temperature Changes
The global average temperature is already higher than at
any time since the Middle Ages
15.0
Degrees Celsius
14.6
14.2
13.8
13.4
13.0
1860
1880
1900
1920
1940
Source: Goddard Institute for Space Studies (GISS)
1960
1980
2000
Climate Security
Environmental effects from climate
change threaten human security
and the global economy
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–
–
–
Global increase in poverty
National and regional instability
Tightened food supplies
Conflict over water resources
© Digital Vision
© UN
Weather Disasters
The economic cost of weather-related catastrophes
Billion Dollars
Uninsured Losses
400
Insured Losses
300
200
100
0
1980-84
Source: Munich Re
1985-89
1990-94
1995-99
2000-04
The Tipping Point
We may already be in the early
stages of a global energy
transition…
One that is as profound as the
advent of the oil age was a
century ago.
The Tipping Point
Oil
(1905)
Renewable Energy
(2005)
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
Renewable Energy
Wind- and solargenerated electricity are
the fastest growing
sources of energy in the
world
Biomass fuels such as
ethanol and biodiesel are
proven and competitive with
gasoline and diesel
Wind
Wind energy is becoming a major part of the global power
industry
60,000
Megawatts
50,000
40,000
30,000
20,000
10,000
0
1980
1985
1990
Source: BTM Consult, EWEA, AWEA, Windpower Monthly and New Energy
1995
2000
2005
Solar
Solar energy is growing even faster
5000
Megawatts
4000
3000
2000
1000
0
1980
Source: PV Energy Systems, PV News
1985
1990
1995
2000
2005
Biofuels
• Biofuels are joining the bandwagon
35,000
Million Liters
30,000
25,000
20,000
15,000
10,000
5,000
0
1980
1985
1990
1995
2000
2005
Policy Changes
1) Ensure that energy markets include renewable
options
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–
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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
Policy Changes
2) Focus on industry standards, permits and
building codes
– Ensure quality hardware
– Address public concerns
about siting
– Design new buildings to
be compatible with
renewables
Policy Changes
3) Educate investors
and consumers
4) Ensure a skilled
workforce
3) Increase public
participation
Choices
World Energy Use
35
30
25
% 2004
20
15
10
5
0
Source: Martinot, BP
Choices
World Energy Growth (2002-2004)
35
30
Annual Percent
Growth Rate
25
20
15
10
5
0
Source: Martinot, BP
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 world’s
people
Worldwatch Institute
Further information and
references for the material in this
presentation are available in the
Worldwatch Institute’s publication
“State of the World 2005”
This presentation is based on a
chapter authored by:
Thomas Prugh, Christopher
Flavin, and Janet L. Sawin
www.worldwatch.org