World energy outlook: High demand, higher prices

The US will produce 20 percent more crude oil a decade from now, become a net exporter of liquefied natural gas by 2016 and will see energy-related carbon dioxide emissions stay below 2005 levels all the way through 2035 … if current laws and regulations remain unchanged.

That’s a big if, of course. But that’s what the US Energy Information Administration (EIA) sees in the country’s energy future under status quo circumstances.

Released this week, the EIA’s “Early Release Reference” case provides a sneak preview of the agency’s Annual Energy Outlook (AEO), which is scheduled to come out this spring. The predictions based on a business-as-usual environment paint a fairly encouraging broad-brush picture, from an energy security standpoint.

As usual, though, the devil is in the details. Study the image a bit more closely, and some of the finer brush-strokes in the early-release numbers give reasons for concern:

• Carbon dioxide emissions per capita are expected to shrink by about 1 percent per year between 2005 and 2035, thanks not just to federal fuel-economy standards but to “higher energy prices.”
• By 2035, world oil prices, the EIA says, will hit $146 per barrel in 2010 dollars. To anyone who glances at commodity prices once in a while, that’s an interesting figure: it’s just $1 lower than the oil-price peak of July 2008, a record-high that many believe contributed to that year’s global economic meltdown.
• And why will oil prices rise so high again? Insatiable global demand, according to the EIA. While US demand for fossil fuels in general, and imported energy in particular, is expected to keep declining through 2035, those reductions will be overshadowed by a rising energy hunger in developing economies like China, India and the Middle East. They’ll help drive up world consumption of liquids — which is not just “regular” oil but unconventional oil such as from Canada’s tar sands and biofuels — to, the EIA predicts, 109.7 million barrels per day.

That’s more than 20 million barrels per day more than the world consumed in 2010. Producing enough oil to meet that kind of demand will require anything but a status quo, business-as-usual approach.