The key driver of change in the global market is not climate change or the political chaos affecting oil producers in the Middle East and elsewhere, or the fall in the cost of renewables. All those things matter, of course, but their impact is minimal compared with the shift in the geography of supply and demand that has transformed the market in the last decade and will continue to do so. That is the most interesting message from the new edition of the International Energy Agency’s annual World Energy Outlook published last week. To understand what has been happening it is instructive to compare the new Outlook with that published 10 years ago. Hydrocarbons – oil, gas and coal – accounted for 81 per cent of total global energy supply in 2008. The figure today is still 81 per cent and, according to the 2018 Outlook, that will decline only marginally over the next 20 years to 74 per cent in 2040. Two things, however, have changed. One was predicted, the other is a complete surprise. The first is the growing role of Asia in global energy consumption. From 18 per cent of the total in 1980, Asian demand has risen to 41 per cent now and is projected to account for almost half by 2040. The second change is the re-emergence of the US as one of the world’s leading energy suppliers, meeting its own needs and beginning to export both oil and gas. The shale revolution was completely unexpected. In the 2008 Outlook it is not mentioned. Now, only 10 years later, the US will produce some 7.6m barrels of oil a day from the main shale formations, with the prospect of much more to come.
FT 26th Nov 2018 read more »