Investment in Oil and Gas Production Crucial for Our Well-being: Report
Oil and Gas: A Critical Part of the World’s Energy Mix
Despite the carbon-cutting push, oil and gas will continue to be a critical part of the world’s energy mix for decades to come, according to an ExxonMobil report. The report warns that significant investments are needed to offset declining rates of production, or else people will live shorter, less fulfilling lives.
“Access to affordable and reliable energy is at the core of every key measure of human development and quality of life,” researchers wrote in the latest edition of the ExxonMobil Global Outlook report. This report examines economic development and energy demand and supply over the next 30 or so years.
According to the report, researchers expect oil and natural gas to continue playing a dominant role, providing over half (54 percent) of the world’s energy needs in 2050.
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This is despite an unprecedented rise in lower-emission options like wind and solar, which are projected to provide 11 percent of the world’s energy supply in 2050, five times what that share is today.
“The utility of oil and natural gas in meeting the world’s needs remains unmatched,” the report’s executive summary reads (pdf). “They are energy dense, portable, available, and affordable—and serve as essential raw materials for many products we use today.”
The Biden administration and others have taken fossil fuels squarely into their crosshairs, with the ExxonMobil report providing a counterpoint to the fight-climate-change-at-all-costs narrative that seems to inform much current energy policymaking.
The issue came to the forefront in dramatic fashion during the recent Republican primary debate, with presidential hopeful Vivek Ramaswamy offering a memorable counterpoint.
“I’m the only candidate on stage who isn’t bought and paid for, so I can say this: the climate change agenda is a hoax,” he said.
“The reality is more people are dying of bad climate change policies than they are of actual climate change,” he added.
Big Changes to Energy Mix
The biggest change in the energy mix in 2050 compared to today is the significant increase in wind and solar, along with a substantial reduction in the use of coal.
“Coal will increasingly be displaced by lower-emission sources of electricity production—not just renewables but also natural gas, which has about half the carbon intensity of coal,” the report says, while projecting an 80 percent explosion in the use of electricity by 2050 globally.
While oil use is projected to decline significantly in personal transportation as the electric vehicle push continues to displace internal combustion engines, oil will remain essential for industry and heavy-duty transport, per the report.
Shipping, long-haul trucking, and aviation (all of which underpin economic activity and growth) will continue to be heavily reliant on oil.
“If every new passenger car sold in the world in 2035 were an electric vehicle, oil demand in 2050 would still be 85 million barrels per day, the same as it was around 2010,” the report says, while estimating that natural gas use will soar within the next three decades.
“Natural gas use is projected to increase by more than 20 percent by 2050 given its utility as a reliable and lower-emissions source of fuel for electricity generation, hydrogen production, and heating for both industrial processes and buildings,” the report says.
The researchers predict that, by 2050, per capita GDP will rise by roughly 85 percent globally, driving higher demand for energy.
The critical question is how that growing demand for energy can be met.
“Failing to meet demand would prevent developing nations from achieving their economic goals and their citizens from living longer, more fulfilling lives,” the report states.
One expert who has made a similar point is Bjorn Lomborg, president of the Copenhagen Consensus think-tank and visiting fellow at Stanford University’s Hoover Institution.
“Avoiding both cold and heat deaths requires affordable energy access,” Mr. Lomborg wrote in a recent op-ed in the New York Post.
“In the United States, cheap gas from fracking allowed millions to keep warmer with low budgets, saving 12,500 lives each year,” he continued.
“Climate policy, which inevitably makes most energy more expensive, achieves the opposite,” he wrote, dovetailing with Mr. Ramaswamy’s remarks during the GOP debate.
More People, More Prosperity, More Demand
The analysts project that the world’s population will grow by around 25 percent between now and 2050, from around 7.8 billion today to 9.7 billion in just under three decades.
Just 3 percent of this growth is expected in developed countries such as the United States, with over 25 percent in the Asia Pacific region and around 65 percent in Africa and the Middle East.
Along with population growth, economic expansion around the world is expected to be significant. Between now and 2050, developing countries will see their per-capita GDP more than double, while the world’s overall economic output per person will grow by around 85 percent, driving up energy demand.
“Global demand reaches about 660 quadrillion Btu in 2050, up about 15 percent versus 2021, reflecting a growing population and rising prosperity,” the report states.
A key question is how the growing energy demand will be met.
Wind and solar “hold great promise,” the report’s authors say, predicting that these energy sources will quintuple in use by 2050. Other lower-emission options like hydrogen and nuclear are also expected to play important roles.
“As lower-emission options grow, we project the world’s energy-related CO2 emissions will decline 25 percent by 2050,” the report says, noting that this is a major shift from the 10 percent increase in emissions over the past decade.
In a nod to the United Nations climate goals of keeping global warming from exceeding 2 degrees C, the report says that “larger reductions are needed” to meet that goal, even though the authors acknowledged that progress in reducing emissions has been “substantial” so far.
ExxonMobil recently announced that it was growing its own lower-emission investments by around 15 percent to around $17 billion through 2027.
“We’re aggressively working to reduce greenhouse gas emissions from our operations, and our 2030 emission-reduction plans are on track to achieve a 40-50
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