Forbes | Jude Clemente | September 29, 2019
Numerous energy headlines from this past week alone caught my attention. They perfectly illustrate the massive scale of investment plans for oil and gas projects around the world. Here are just a few:
- “Japan to invest $10 billion in global LNG infrastructure projects.”
- “Tellurian Signs $7.5 Billion LNG Pact With India’s Petronet.”
- “LNG investments hit record of $50 billion in 2019.”
- “Brazil’s Huge $25 Billion Oil Auction Clear Very Important Hurdle.”
As fate would have it, on Tuesday, a day after my birthday (I turned 25 again), the U.S. Department of Energy’s EIA released its International Energy Outlook 2019. It’s a glorious read, and one that I deem mandatory for all Americans, and even those globally interested in energy. We should all take advantage of the fact that we have such government information freely available to us open-source online.
What’s past is prologue: more oil, more natural gas. No kidding. These two essential fuels supply nearly 65% of the energy used in the U.S. and global economies. Global annual oil demand has been surging ~1.4 million b/d since 2000 alone, with gas usage up 8 Bcf/d per year.
Any slowdown in new consumption for these two comes from a lack of economic growth (e.g., 2008 Economic Recession) and shouldn’t be taken as some sort of structrual change. Ultimately, any prediction of an oil and gas downfall has no evidence behind it. It’s simply speculation not rooted in any historical proof.
Given that economic and population expansion are the primary indicators of more energy demand, global energy demand is set to boom 45% by 2050. I’d argue that even the U.S. should be cited as a “still developing country:” every year, we add over 3 million people and some $300-400 billion in real GDP. By 2050, the world will add nearly $85 trillion in real GDP and add 2.5 billion people to surpass 10.2 billion humans.
The simple reason why we see such huge investments in oil and gas as seen in the above headlines is because we know that the world will need even more of them. In particular, the still developing world is looking at the oil and gas consuming West to see how affordable and reliable energy can grow economies and improve human development.
And why not?
Any newborn or even 16-year old girl, for instance, living in the oil- and gas-dominated West today has never had it better – never being more educated, never making more money, never being healthier, never living longer. We truly have the lives our ancestors never could’ve dreamed of just a century ago.
The main reason for the following graphic is that oil is the world’s most vital fuel and has no significant substitute whatsoever. Oil is the basis of globalization, utilized in practically everything that we do, and the most internationally traded commodity in the world. Oil’s value is so immense that too high of a price can cause a global economic recession.
Read the full story here.