Who dares predict what revenues oil producers will earn 10, 20 or 30 years from now? The last couple of years have provided a sobering lesson in the extreme volatility of oil prices. So what will the future hold for countries whose whole economies are built on the export of oil and gas? Will they be rich beyond the dreams of avarice or poor as church mice?
A trend, much talked about these days, will need to be watched carefully. It is the worldwide effort to cut the emissions of greenhouse gases, such as CO2. By causing global warming, these carbon emissions are having a devastating impact on the climate of our planet.
The danger from carbon emissions has sparked a worldwide search for renewable sources of energy, such as wind power, nuclear energy and solar energy. China, the United States, Spain and Germany have all launched ambitious projects to harness solar energy. The idea is also catching on in the Arab world. According to the International Energy Agency, the world’s dependence on natural gas will drop dramatically if environmental policies are adopted to limit carbon emissions.
The IEA’s World Energy Outlook, its influential annual publication due out today, is said to predict a coming glut in gas supplies and overcapacity of gas pipelines. Russia, Iran and Qatar, three major gas exporters, should take note.
Another trend worth watching is an expected oversupply of oil. Iraq, for example, has recently signed a number of highly-significant agreements with international companies which could more than quadruple its output within a decade. Within the coming years, OPEC countries will have to face the most unwelcome prospect of having to decrease their own production to make way for Iraq’s soaring output.
At the same time, more intensive oil exploration deep beneath the seabed, together with new technologies for enhanced oil recovery of existing fields, are expected to give a considerable boost to the world’s recoverable oil reserves. In other words, far from oil and gas being scarce, they may well soon be plentiful. What was a sellers’ market could easily become a buyers’ market within the coming decade.
With these developments in mind, who would dare predict where prices will be a decade or two from now?
– Patrick Seale is a leading writer on the Middle East and syndicated columnist for Agence Global.
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