In its annual outlook for energy report, ExxonMobil presents data that contradicts Obama's green energy utopianism. Who has the better track record of predicting the global energy future: Obama or a private company that actually produces the stuff?
In its just published report, "The Outlook for Energy: A View to 2040," Exxon makes three key points. First, by 2040, global energy demand is predicted to rise by 25%. That demand must be met if living standards are to improve, and there are only three feasible ways of meeting it: fossil fuels, nuclear energy, and alternatives. The choice of energy sources will be driven by a combination of cost and government policy. Coal remains the cheapest source of energy for electrical generation, but its use is likely to drop after 2025 as a result of environmental policies. Reliance on oil and natural gas, on the other hand, will continue to expand, as will nuclear energy and alternatives.
Second, the "carbon intensity" of the world's economy will drop by half. More efficient use of fossil fuels means a savings of close to 40%, thus reducing cost and lowering carbon emissions by an equal percentage. U.S. energy companies are producing lubricants, plastics, materials, and other products that result in lower energy usage. Greater efficiency means lower costs, resulting in higher living standards.
Third, in 2040, oil will still be the world's leading energy source, followed by natural gas. Together with coal, these sources will provide for 80% of the world's energy needs. Nuclear energy, projected to double by 2040, will provide most of the remaining 20%. Wind power will deliver a mere 2% of global energy. Solar even less.
Fortunately, there are ample supplies of oil and gas to power the world economy well beyond 2040. The International Energy Agency estimates that recoverable oil and condensate resources now stand at 4.5 trillion barrels, replacing earlier "peak oil" estimates of one trillion barrels. By 2040, it is likely that recoverable oil will have risen again, perhaps by a factor of five and certainly enough to power the global energy through the end of the century.
Recoverable natural gas resources are even greater. According to IEA, current gas resources are enough to supply the current level of global needs for another 200 years. And this estimate does not include vast reserves that will result from new exploration and advances in technology. With the U.S. now self-sufficient and exporting natural gas, the West's energy security is assured to a degree that has not existed in the past.
That's good news for the American people and for the world, even if it is not news that Obama wants to hear. With a century's worth of cheap, practical energy in hand, the global economy has a good chance of expanding just as it did in the last century – a century in which U.S. living standards increased by a factor of 10. I am living ten times as well as my grandfather did when he was a boy. There's no reason my grandchildren should not be living ten times as well as I am today. What stands in their way is not a lack of resources or technology – it's government.
Specially, liberal government. Obama's outlook – and that of the green activists who gathered in Paris in December for the latest global climate summit – is something very different from that of global prosperity based on cheap fossil fuels. Unlike Exxon's carefully researched report, Obama's green fantasy is based on ideology rather than data. Its projection of 50% reliance on green fuels is a pipe dream, and its climate data is skewed to match ideological goals (as, for example, in NOAA's decision, just ahead of the Paris meeting, to shift methodologies for collecting ocean temperature data to what the agency calls "new methods").
Most importantly, Obama's outlook ignores market realities and assumes that governments can force their way on acquiescent populations. It doesn't seem to occur to the president that the world's seven billion people might not wish to pay double for their energy needs. That is one reason China and India and the rest of the developing nations refused to accept a binding agreement in Paris. Even developed nations in Europe and Asia were secretly relieved at the non-binding result.
That leaves the Obama administration on its own, driving energy producers in the U.S. out of business while the rest of the world continues on a path to a more prosperous 2040. New regulations restricting methane release at drill sites will make U.S. oil production just that much less competitive. Not just oil and gas, but coal in particular has been a target. The administration's latest decision to suspend coal leasing on federal lands is one more blow against this once great industry – and one more impediment on the nation's economy.
What's needed is a national energy policy that acknowledges the reality that the U.S. and the world will remain dependent on fossil fuels up to and well beyond 2040. Instead of hampering domestic production and restricting export, Washington needs to promote fossil fuels as a vital American industry.
Nothing can change the reality that the world will depend on fossil fuels well into the present century, if not beyond. But Obama has done a great deal of damage to domestic energy production, and he is determined to do more in his last year in office. He can be stopped only by the will of the people and its representatives, and by the courts. Barring government interference, the U.S. will continue as the world's top oil and gas producer.
As oil prices recover, more jobs will be created, and the U.S. will become fully self-sufficient in energy. Oil and gas will continue as one of the foundation stones of a strong economy, with the U.S. becoming a net oil exporter by 2025 and the world's second largest natural gas exporter by 2040. Although Obama can't see it, the outlook for energy, and for the U.S. economy, is bright. It's just not built on windmills and solar panels.
Jeffrey Folks is the author of many books and articles on American culture including Heartland of the Imagination(2011).
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