Sustaining Energy and Mobility in the 21st Century: Challenges and Opportunities for the U.S.

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Sustaining Energy and Mobility in the 21st
Century Challenges and Opportunities for the U.S.

• Amy Myers Jaffe
• Wallace S. Wilson Fellow for Energy Studies,
• James A. Baker III Institute for Public Policy
• Rice University
• Richard Lugar/Purdue University
• Summit on Energy Security
• August 29, 2006

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Geopolitics, not Geology, is driving the energy
future
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International Backdrop for Oil

• Terrorist attacks on Crude Processing Facilities
  in Iraq, Saudi Arabia
• U.S.-IranRisks to Strait of Hormuz
• Saudi Arabia Political Uncertainties
• Middle East Period of Great Political Transition
• Future of U.S. role in Iraq?
• Arab-Israeli Conflict
• Russia Putin and the Statists
• Latin America Populism and Hugo Chavez
• Africa Localized unrest in Nigeria
• China Demand Wildcard

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Current State High Crude Prices

• Crude prices have more than doubled since late
  1999
• WTI largely traded in the 20 range throughout
  the 1990s
• WTIs price has since risen to more than 70 per
  barrel
• 2005 average 56.64
• January 2006 64.95

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Country Total Primary Energy Consumption Per Person (2002) (Million BTU)
Brazil 48.7
China 33.3
Germany 173.1
India 13.3
Japan 172.3
United States 339.1
Source EIA
Source BP
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(No Transcript)
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World Liquids Production Outlook
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OPEC production capacity has
fallen, not increased, since 1979
Member Country 1979 1983 1990 1997 1998 2000 2001 2003 2005
Saudi Arabia 10.84 11.30 8.00 9.65 9.80 9.50 9.90 10.15 10.30
Iran 7.00 3.00 3.10 3.70 3.70 3.75 3.80 3.80 4.00
Iraq 4.00 1.50 3.60 2.30 2.80 2.90 3.05 2.20 1.80
Kuwait 3.34 2.80 2.40 2.40 2.40 2.40 2.40 2.50 2.60
UAE 2.50 2.90 2.20 2.40 2.40 2.40 2.45 2.50 2.40
Qatar 0.65 0.65 0.40 0.71 0.72 0.73 0.75 0.75 0.82
Venezuela 2.40 2.50 2.60 3.45 3.30 2.98 3.10 2.50 2.50
Nigeria 2.50 2.40 1.80 2.00 2.05 2.10 2.30 2.30 2.30
Indonesia 1.80 1.60 1.25 1.40 1.35 1.35 1.30 1.15 0.90
Libya 2.50 2.00 1.50 1.45 1.45 1.45 1.45 1.45 1.60
Algeria 1.23 1.10 0.75 0.88 0.88 0.88 0.88 1.15 1.35
Total 38.76 31.75 27.60 30.34 30.85 30.44 31.38 30.45 30.57
Call on OPEC 34.01 16.65 22.20 27.59 25.85 30.04 28.23 29.20 29.87
Spare Capacity 4.75 15.10 5.40 2.75 5.00 0.40 3.15 1.25 0.70
OPEC Production and Spare Capacity, 1979-2003
(mmb/d)
Opec can replace all Iraqi/Kuwait oil in 1990
Asian economic crisis leaves extra capacity in
1998
Demand bumps up against capacity
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National Oil Companies on the RiseThey Control
the Resources
Oil Reserves Held by Russian Companies 69 Bill.
Bbl
NOC Oil Reserves (Equity Access) 123 Bill. Bbl
Full IOC Access 70 Bill. Bbl
NOC Oil Reserves (No Equity Access) 886 Bill. Bbl
Oil Gas 2,182 Bill. Bbl
WW Proven Oil Reserves 1,148 Bill. Bbl
Reserves Held by New Russian Companies
NOC Reserves (Equity Access)
Full IOC Access
NOC Reserves (No Equity Access)
Source PFC Energy
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Saudi Arabia
From Osama Bin Ladens Letter to the American
People You steal our wealth and oil at paltry
prices because of your international influence
and military threats. This theft is indeed the
biggest theft ever witnessed by mankind in the
history of the world. --Osama Bin Laden In
December 2004, called on the faithful to attack
oil facilities as part of the jihad against the
West
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Hurricanes Rita, Katrina And Gulf Oil Natural
Gas Operations
MISSISSIPPI
ALABAMA
TEXAS
LOUISIANA
R
K
Rita landfall
Katrina landfall
Sources NOAA, EIA
Source API
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How to create viable alternatives?

• It is desirable to have diversity of supply
  options in our automotive transportation system.
• Several viable options exist.
• New policy frameworks needed to remove obstacles
  and provide incentives.

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Spending on Energy Science has collapsed since
1973