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Changing the Oil Economy. State of the World Worldwatch Institute. The Oil Economy. Strategic commodity Economic security Civil security Climate security Alternatives. The Oil Age fueled the 20 th Century How does it affect global security?. Courtesy Elmendorf AFB. Oil in Modern Life.

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changing the oil economy

Changing the Oil Economy

State of the World

Worldwatch Institute

the oil economy
The Oil Economy
  • Strategic commodity
  • Economic security
  • Civil security
  • Climate security
  • Alternatives

The Oil Age fueled the 20th Century

How does it affect global security?

Courtesy Elmendorf AFB

oil in modern life
Oil in Modern Life
  • Cars and power plants
  • Personal care products, cosmetics and drugs
  • CDs, cell phones, radios, cameras, TVs
  • Clothing, sports, household furnishings
  • Food production and transport

How wide spread is our oil-based culture?

a strategic commodity
A Strategic Commodity
  • Oil is central to modern civilization
      • It is the world’s largest source of energy
  • Oil has changed from an asset to a liability
      • Oil is key to manufacturing, feedstock and energy and there are no ready substitutes
  • Oil dominates world energy budgets
      • Per capita and total energy consumption skyrocketed once fossil fuels became widely available
from wood to oil
From Wood to Oil

U.S. Consumption, 1630-2000

Quadrillion Btu

Petroleum

Natural Gas

Nuclear Electric Power

Hydroelectric Power

Coal

Wood

Source: DOE

consumption
Consumption

World Oil Consumption, 1950-2004

Source: BP

china
China

China exported oil in the early 90’s

Today, it is the world’s second largest importer

Consumption

Production

Source: DOE

consumption1
Consumption
  • Global consumption of useful energy per person is about 13 times higher than in pre-industrial times
  • Per capita consumption is much higher in industrial than developing nations
  • Consumption has risen despite increasing pollution, emissions and other problems

© USDA

transportation
Transportation

The world’s automobile fleet grew from 53 million in 1950 to 539 million in 2003

China, with an expanding economy, now has 20 million cars and trucks and by 2020 is projected to have a fleet of 120 million

Oil accounts for nearly all transportation energy use

Automobiles

Digital Vision

transportation1
Transportation

Air travel has increased dramatically since jets were introduced

1950: 28 billion passenger-km

2002: 2,942 billion passenger-km

Air Travel

© NASA

supply
Supply
  • Conventional view--production will keep rising
    • IEA projects production will reach 121 million barrels per day
    • Sufficient oil reserves exist and new technologies will aid in better extraction

© DOE

a finite resource
A Finite Resource
  • Dissident view--production will begin to decline by 2007
    • Gap between supply and demand will continue to grow
    • New technologies will only accelerate rate of depletion
    • Production has outrun discovery for past three decades

© Getty Images

discoveries
Discoveries

Discoveries

Production

World oil discoveries are lagging far behind production

60

50

40

30

Billion Barrels

20

10

0

1920

1940

1960

1980

2000

2020

production resources
Production & Resources

Estimated Resources

According to many geologists, resource constraints may soon limit world oil production

30

25

Historical Production

20

Billion Barrels

15

10

5

0

1500

1700

1900

2100

2300

2500

Source: DOD, DOE

falling production
Falling Production

6 of OPEC’s 11 members

United Kingdom

Indonesia

Norway

Mexico

Venezuela

Production has reached a plateau or declined in 33 of the 48 largest producers, including:

© Getty Images

oil production
Oil Production

Production Per Day

Former Soviet Union

United States

Saudi Arabia

Source: BP

u s production
U.S. Production

U.S. oil production peaked in 1971

Million Barrels Per Day

Lower 48 states

Alaska

Source: DOE

dependency
Dependency
  • Industrial nations use most of the world’s oil
  • Developing nations
    • Are more dependent on oil as share of total energy use
    • Use more in proportion to the size of their economies
    • Many import virtually all their oil
    • Are more vulnerable to price shocks than many industrial nations
dependency1
Dependency

Percent of Oil in Energy Budgets

Ecuador

Thailand

Japan

U.S.

France

paying the price
Paying the Price

Two decades of stable oil prices have abruptly ended. Is this a temporary anomaly?

Dollars Per Barrel

human cost
Human Cost

Price increases translate into human cost in poor countries

rising food costs affect diets

cooking fuel becomes less affordable

© FAO

© UN

price and economic growth
Price and Economic Growth

IEA estimates that if the price per barrel price increase is sustained, it will reduce economic growth throughout the world in 2006

Percent Reduction in Economic Growth

U.S.

1.0

Europe

1.6

India

3.2

Indebted countries

5.1

world oil trade 2002
World Oil Trade, 2002

Exports, MBD

< 1

1-2

2-4

5-6

6-9

world oil trade 2020
World Oil Trade, 2020

Exports, MBD

< 1

1-2

2-4

5-6

6-9

Trillion Ton-Miles

5.6

8.8

8.3

6.3

7.1

8.8

12.9

exporter dependency
Exporter Dependency
  • Exporters rely on a continuous stream of oil revenues because their economies are not diversified
  • Oil income is often diverted to enrich elites and to pay for military buildup

© Getty Images

uncertainty
Uncertainty

Growing demand will increase dependence on supplies from the Middle East

Oil-producing countries are often politically unstable

True state of reserves in Persian Gulf, particularly Saudi Arabia, are in question

  • Countries such as China and India are entering into oil-intensive development and will intensify competition for oil
  • Competition will trigger soaring prices
oil and civil society
Oil and Civil Society
  • Access to oil has provoked power maneuvering, military interventionism, and alliances of convenience
  • Oil resource wealth has tended to support corruption and conflict rather than growth and development

© Lance Cpl. Nathan Alan Heusdens

oil and climate
Oil and Climate

Global consensus that Earth is warming and that deforestation and the burning of fossil fuels are the major causes of climate change

Digital Vision

Oil contributes 42% of all emissions of carbon dioxide (CO2) emissions, a greenhouse gas

greenhouse gas
Greenhouse Gas

Atmospheric concentration of carbon dioxide is now higher than at any time in the last 650,000 years

Parts Per Million

Source: Scripps Institute of Oceanography

greenhouse gas1
Greenhouse Gas

Past and future CO2 concentration

Source: IPCC

climate change
Climate Change

Scientists project that rising temperatures will:

  • melt ice caps and glaciers, raise sea levels, and increase storm severity
  • trigger regional droughts and famines
  • lead to the spread of diseases like malaria and dengue fever
  • affect the growth and harvest of world food crops

Glaciers are already melting

temperature changes
Temperature Changes

The global average temperature is already higher than at any time since the Middle Ages

Source: Goddard Institute for Space Studies (GISS)

climate security
Climate Security

Environmental effects from climate change threaten human security and the global economy

  • Global increase in poverty
  • National and regional instability
  • Tightened food supplies
  • Conflict over water resources

© Digital Vision

© UN

weather disasters
Weather Disasters

The economic cost of weather-related catastrophes

Billion Dollars

Uninsured Losses

Insured Losses

Source: Munich Re

the tipping point
The Tipping Point

We may already be in the early stages of a global energy transition…

One that is as profound as the advent of the oil age was a century ago.

the tipping point1
The Tipping Point

Oil

(1905)

Renewable Energy

(2005)

improving efficiency
Improving Efficiency

Improving automobile fuel economy can make an enormous difference

Gasoline and diesel-electric hybrid cars are twice as efficient as internal combustion engines

renewable energy
Renewable Energy

Wind- and solar- generated electricity are the fastest growing sources of energy in the world

Biomass fuels such as ethanol and biodiesel are proven and competitive with gasoline and diesel

slide39
Wind

Wind energy is becoming a major part of the global power industry

60,000

50,000

40,000

Megawatts

30,000

20,000

10,000

0

1980

1985

1990

1995

2000

2005

Source: BTM Consult, EWEA, AWEA, Windpower Monthly and New Energy

solar
Solar

Solar energy is growing even faster

5000

4000

3000

Megawatts

2000

1000

0

1980

1985

1990

1995

2000

2005

Source: PV Energy Systems, PV News

biofuels
Biofuels
  • Biofuels are joining the bandwagon

35,000

30,000

25,000

Million Liters

20,000

15,000

10,000

5,000

0

1980

1985

1990

1995

2000

2005

policy changes
Policy Changes
  • Ensure that energy markets include renewable options
    • Enact pricing laws to guarantee fixed minimum prices for electricity
    • Require that utilities provide access to grids
    • Establish quota systems mandating a share for renewables
policy changes1
Policy Changes
  • Focus on industry standards, permits and building codes
  • Ensure quality hardware
  • Address public concerns about siting
  • Design new buildings to be compatible with renewables
policy changes2
Policy Changes
  • Educate investors and consumers
  • Ensure a skilled workforce
  • Increase public participation
choices
Choices

World Energy Use

% 2004

Oil

Hydro

Coal

Nuclear

Natural

Gas

Other

Renewables

Traditional

Biomass

Source: Martinot, BP

choices1
Choices

World Energy Growth (2002-2004)

Annual Percent

Growth Rate

Hydro

Oil

Coal

Wind

Gas

Biofuels

Nuclear

Solar PV

Traditional

Biomass

Source: Martinot, BP

what do you choose
What do you choose?

One path leads to the possible calamitous loss of a prime energy source

The other path leads toward a world of abundant clean energy for more of the world’s people

worldwatch institute
Worldwatch Institute

Further information and references for the material in this presentation are available in the Worldwatch Institute’s publication “State of the World 2005”

This presentation is based on a chapter authored by:

Thomas Prugh, Christopher Flavin, and Janet L. Sawin

www.worldwatch.org

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