According to the IEA (International Energy Agency), the U.S. will become the world’s top producer of oil within five years, a net exporter of the fuel around 2030 and nearly self-sufficient in energy by 2035.
Recently, however, an “energy renaissance” in the U.S. has caused a boost in oil, shale gas and bio-energy production due to new technologies such as hydraulic fracturing, or fracking. Fuel efficiency has improved in the transportation sector. The clean energy industry has seen an influx of solar and wind efforts.
By 2015, U.S. oil production is expected to rise to 10 million barrels per day before increasing to 11.1 million bpd by 2020, overtaking second-place Russia and front-runner Saudi Arabia. The U.S. will export more oil than it brings into the country in 2030 and Iraq will exceed Russia to become the world’s second largest oil exporter.
At that point, real oil prices will reach $125 a barrel. By then, however, the U.S. won’t be relying much on foreign energy, according to the IEA’s World Outlook.
Globally, the energy economy will undergo a “sea change,” according to the report, with nearly 90% of Middle Eastern oil exports redirecting toward Asia.
And what of energy efficiency efforts?
Fossil fuels, which enjoyed a 30% jump in subsidies last year to $523 billion worldwide, will still surpass renewable energy sources, according to IEA. But so-called green power will become the world’s second-largest form of generation within three years and will threaten coal’s supremacy by 2035.
That progression, however, “hinges critically on continued subsidies” for wind, solar and bio-fuel technologies, which last year amounted to some $88 billion and needs to reach $4.8 trillion through 2035, according to IEA.
Even then, however, “the world is still failing to put the global energy system onto a more sustainable path,” according to the report.
Global energy demand will boom by more than a third by 2035, rising to 99.7 million barrels a day from 87.4 million last year. China’s demand will rise 60% over the period; India’s will more than double. Demand in developed countries will increase just 3%, with the desire for oil and coal losing share in the overall energy mix.
Energy-related carbon dioxide emissions will creep up, causing a long-term average temperature increase and energy production will continue to suck at the world’s water resources – it already accounts for 15% of total water use.
My opinion is that the IEA oil price target of $125 is high, while demand will continue to increase, supply is also increasing and the OPEC cartel lock on pricing oil will come to an end.
Next up, wars over water!