The Gulf’s known unknown
We all know the oil is running out. But the GCC is struggling to devise a collective approach to energy security for the future, reports Trends magazine.
February 7, 2010 5:12 by Edmund Sheen
OPEC, however, stands by its latest projection: world oil demand rising to 106 million barrels a day by 2030. Yet it believes policy contradictions in the oil-consuming countries and the threat they pose to the livelihood of the oil producers are of at least as much risk to global energy security as unmet demand. Because the focus remains on a reliable oil supply, little attention is paid to the issues of how oil producers are expected to meet demand or American dollar fluctuations against other major currencies.
The broader issue of energy security continues to cause collective anxiety. Defined as the continuous availability of energy in varied forms, in sufficient quantities and at reasonable prices, energy security has many aspects. According to the honorary vice chairman of the World Energy Council, Hisham El-Khatib, factors that have implications for world energy security include environmental challenges, liberalization and deregulation, the growing dominance of market forces, and the need for large investments and advanced technologies.
He was bullish on the supply side. “The world depends for more than 80 percent of its energy on the consumption of fossil fuels. These are efficient, highly concentrated, tradable and relatively cheap. The proven resource base is enough to meet world requirements for decades, and although new and renewable forms of energy are welcome, their foreseeable contribution to world energy security is limited,” El-Khatib says.
So the threats come from elsewhere, like the environment, a shortage of investment and, sometimes, political issues. “Carbon emissions from fossil fuels are increasingly being considered as a threat to sustainable development and there is a need to mobilize energy investments, which average $1 trillion per year. It is hoped that technology will contribute toward energy security through mitigation and efficiency as well as discovering new energy sources,” El-Khatib says.
Cost of Fuel
Industry veterans such as El-Khatib believe that, whatever happens to the demand-supply equation, the region will continue to play a vital role in world energy security, and will remain the center of political and security interest for major importing countries.