As the ministers of the Organization of the Petroleum Exporting Countries prepare to meet in Vienna on Friday, the world is focused on the implications of the new supplies of crude oil and natural gas, primarily from shale and tight resources, and the lower-price environment they have helped create over the last 12 months.
One of the implications is that industry has, in some cases, delayed or scaled back projects that may not look as attractive at today’s prices.
This reaction to current market conditions is to be expected in the short term, but we have to keep the world’s long-term needs in mind. In today’s operating environment, it’s easy to put aside the challenges inherent in ensuring affordable and reliable energy supplies into the future. But to further advance the world’s living standards and improve the quality of life for people everywhere in the years ahead, we’ll need to increase global energy supplies.
The wider context is, of course, a world continuously reaching for affordable and reliable energy to drive economic growth and build prosperity. Every modern necessity and convenience — from the food we eat, to the health system that keeps us well, to the many electronic devices that keep us connected and entertained wherever we are — all of it is dependent on energy in one form or another.
And people all around the world aspire to — and are working toward — this standard of life. It’s often underappreciated just how much catching up the developing world has to do. Energy consumption per capita in non-Organization for Economic Co-operation and Development countries is less than one-sixth of that in the United States.
As these nations advance and work to improve the quality of life, demand for energy will rise. The U.S. Energy Information Administration projects global energy demand will increase roughly 40% by 2035 compared to 2013 levels, and the world is going to need all forms of energy — crude oil, natural gas, coal, renewables and nuclear — to meet that demand.
The pathway to prosperity will be through affordable energy, and much of that will be from fossil fuels. We recognize the concerns this raises around greenhouse gas emissions, and taking prudent, practical and cost-effective action to address climate change risks is the right thing to do.
Reducing greenhouse gas emissions in the face of rising energy demand presents a formidable challenge to our global society. As we work to address climate change risks, we must create solutions that achieve environmental objectives without undermining growth of the global economy and our aspirations for a better quality of life for all.
If we’re going to meet the world’s energy needs and achieve our environmental objectives, we will need to continue to pursue advancements in technology and innovation — and invest significant capital. The International Energy Agency forecasts that over $40 trillion in additional investments in energy supply and $8 trillion in energy efficiency is required to meet the world’s energy needs through 2035.
To enable that investment, the policies and regulations that govern the energy industry must support continued growth of reliable and affordable supplies.
Industry cannot move forward without stable, commonsense policy frameworks that not only enable development of energy resources, but ensure that the subsequent affordable and reliable production reaches the market.
A predictable policy framework will underpin efforts to move past the short-term pullback in investments to ensure that industry can develop the supplies we will need to provide greater prosperity for decades to come.