This week, Exxon Mobil (XOM) laid out the facts of oil and energy demands and felt confident enough to say all their reserves will be exploited. Despite fear-mongering about climate, population, income-inequality and desperate efforts to redistribute billions of dollars from rich nations to poor nations, the world's thirst for oil will matter more. In fact, the world's thirst for oil will be driven by prosperity.
The proposed policies portray nations that are on the cusp of rapid growth as feeble and inadequate, when they are anything but that. Not only should rich nations reject this rhetoric but so, too, those supposed victims whose growth would be snuffed out with new rules.
Drill, Baby, Drill
Exxon Mobil has taken information from the International Energy Agency on reaching the goal of reducing global greenhouse gas emissions by 50%, below the 2005 level, by the year 2050, and the tally coming in at a cool $45 trillion. In other words; it simply isn't happening. Moreover, the UN report on climate change released last week comes to the conclusion that rich nations in Europe and the United States owe poor nations $100 billion a year to protect them from the ravages of climate change. That line of thinking, so incendiary and scuttlebutt was pulled from the 48-page summary of the report at the request of the United States.
Yet there have been plenty of quotes from officials involved in the push for global climate change regulations and policies.
"First of all, developed countries have basically expropriated the atmosphere of the world community. But one must say clearly that we redistribute de facto the world's wealth by climate policy. Obviously, the owners of coal and oil will not be enthusiastic about this. One has to free oneself from the illusion that international climate policy is environmental policy. This has almost nothing to do with environmental policy anymore, with problems such as deforestation or the ozone hole." Ottmar Edenhofer
Be that as it may, it's clear that the hype over renewable sources displacing fossil fuels is a myth, but not for lack of effort. Wind seems dead, but solar has taken on a life of its own, and could soon stand without government help, which means there are investment opportunities. But the big news is that the world will need oil and gas for the foreseeable future. I really don't think many people understand just how much longer the demand for fossil fuels will grow. In addition to China and India, amazing economic growth will spark a surge in demand from several nations including:
By 2040 there will be 2.6 billion more people on the planet, and the global economy will grow by 130% according to data from Exxon Mobil. Oil and gas will meet 60% of energy demand driven by transportation. Natural gas will displace coal as number two source of energy driven by 90% increase in electricity demand. I do take issue with assumptions made by Exxon and IEA on nuclear if indeed Japan abandons it completely and France embarks on plans to cut its reliance by 50%.
The energy use table underscores the miracle of fossil fuels and evolution of mankind. First, coal powered the First Industrial Revolution, and then oil and gases energized the Second Industrial Revolution, although sadly 2 billion people still need biomass for energy to prepare their dinners.
(I know hipsters think cooking oil will be the fuel of the future, but it's a drag, takes a lot of time and effort and can't power industry. The rich Western biomass crowd is fooling itself in effort assuage a needless sense of guilt.)
The fracking miracle will take hold around the world, providing amazing opportunity for American ingenuity and know-how. In the meantime, the natural gas phenomenon has stalled for a lack of pipes and infrastructure and that must change immediately. The time to strike is now!