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December 05, 2007
The costs of meeting the global demand for oil
I'm doing some research for the Robert Schalkenbach Foundation - looking at the post-invasion ab/use of Iraqi resources. I'm going to be using this blog to write about some of what I find out. A good place to start, I think, is with what Fatih Birol (head of the Economic Analysis Division of the IEA) has to say about the costs of meeting the global demand for oil.
I was (naively) stunned by the amounts of money involved, before you even take into account the costs associated with global warming etc. For Birol, "To meet projected growth of 1.7% per year over the next three decades, $16.5 trillion, or almost $550 billion a year, will need to be invested in global energy supply infrastructure. This is equal to around 1% of projected global GDP and 4.5% of total investment on average" (Birol 2005, 45). Equally strikingly, oil is seen as such a key commodity that "[a]lthough the oil investment flows projected for the next three decades will be large and will rise progressively, the availability of capital is not expected to be an investment constraint" (Birol 2005, 50). The type of sum's it's hard to even conceptualise - but the money should be readily available...
Birol, F. (2005) "Gulf Oil Investment Outlook: Trends and Issues," in Gulf Oil in the Aftermath of the Iraqi War: Strategies and Policies.
