The first energy source men invented was fire, and since then it didn’t stop to rely on one or other source of energy for daily livelihood. Energy plays a huge factor in our lives, providing comfort, increasing productivity and allowing us to live the way we want too.
Meaning of the Energy Security varies basing the trade relativism of Oil and Gas. Non- OPEC countries are highly dependent on import of Oil and Gas concern about energy security related to focus on supply and vice versa for the Organization of the Petroleum Exporting Countries (OPEC) dependant on the export of Oil & Gas. With the accelerated rate of growth and new innovative technologies, the world’s energy consumption will elevate. And the critical factors in geopolitical, economical and environmental shall depend on how it is produced and used.
Oil prices have plummeted over the years with a high price per barrel (159 liters) over $100 of “black gold” in the summer of 2014 and going as low as $40 per barrel over a period of 2 years. The plunging prices of Oil are both as a challenge and opportunity for the Oil and Gas Industry. Existing Oil and Gas Giants like Exxon, Shell, Saudi Aramco are likely to emerge even stronger with Oil price slump as it not only brings in more cost-effective production but also a means to pull in new technologies and further improve operational processes.
According to British Petroleum (BP), four fifths of the current growth of worldwide energy consumption is taking place in emerging economies like India and China. With the increased consumption of energy, alternatives energy sources are becoming more viable. Renewable energy sources such as solar power, hydro power and wind power are more environmental friendly and could partially eradicate the consumption of fossils. Though Renewable energy comes from a source that will not deplete but renewable energy is not commercially viable, capturing these resources is expensive, and many are intermittent, which complicates using them on a large scale and storage is a secondary challenge. In 2015, World energy consumption for electricity generation was coal 40.8%, natural gas 21.6%, nuclear 10.6%, hydro 16.4%, ‘others’ (solar, wind, geothermal, biomass, etc.) 6.3% and oil 4.3%. Coal and natural gas is still the most reliable energy fuels for generating energy cause of its ready use property and more economical production. It is of paramount importance for any alternative energy source to be as fuel efficient as fossil, easily accessibility being another concern and their integration in the society to fit into the widely acceptable source of energy. One big advantage of using fossil fuels is that they can be easily stored and transported. Having a stable composition, they are strong enough to be carried from one place to another.
Future of the Fossils: Switching to renewable energy is not as simple as it is being made out basing the limitations attached with renewable source of energy, Oil and Gas will still continue to dominate the world for decades, as there has been huge investment already been made, moreover its nature of reliability and accessibility being additional factor. According to some of the reports of top consulting firms such as McKinsey, Bain etc., most of them predict a peak oil demand near 2030 and then a rapid decline in demand for oil. But the decline shall be determined by the future of the oil industry. Also with increased adaption of cleaner fuel, natural gas will be the primary energy mix at least for next three to four decades. Natural gas is cheaper compared to other fossil fuels and cheaper than electricity when used for supplying home appliances, another important fact is that natural gas burns without releasing any soot or sulfur dioxide. Another viable factor to natural gas is it is abundant and almost worldwide available.
The primary consumption of oil is estimated to increase from 3.8 Billion tones of oil equivalent to over 4 Billion tones by 2020.The fuel mix may continue to be flexible and the share of oil in the primary energy mix may change, but, the number of barrels of crude oil required to meet the energy demands of the growing population can be higher than the current levels. Also, the share of energy consumption from gas is expected to increase from 3.2 Billion tones to 4.2 Billion tones.
Though Oil reserves depleting at the high rate but the world supply of crude oil isn’t going to run out any time soon, and we will be producing oil for decades to come. With the ongoing demand of oil in the rapidly expanding vehicle market, it is still the primary source of fuel. A rising 83% of the world is undeveloped, and the transport demands for the poor are just now coming to light. Given the importance of oil it is still a widely used fuel and much more convenient to the society. Though Price inelasticity of Global Demand could be the most crucial push in energy discussion which seeks to stop oil production or divest from oil companies. Soaring gas prices and environmental concerns, electric cars still doesn’t hold good reputation as it is comparatively expensive and hold less power, moreover electric cars are not completely free of pollution cause of toxicity of batteries Thus Oil still holds the reputation as our primary fuel and does not have a significant substitute.
There has been a global shift in production; there are also new centers of demands in the developing world – such as Indian and China that are changing the geography of demand. In recent times, China alone accounted for nearly three-quarters of global growth in energy consumption. It is now recognized that major future growth in the energy demand will come from the developing world that continues to experience rapid rates of population growth, urbanization and economies. Though the alternative energy sources to fossil fuels has been around which are expected to play an increasingly vital role in the mix of power generation, Oil and Gas would still drive the energy security to meet the energy needs on global scale as a more viable energy provider.