Energy

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Energy Will It Go from Bad to Worse?
Joseph P. Kalt Ford Foundation Professor of
International Political Economy John F. Kennedy
School of Government, Harvard University and Visit
ing Professor of Economics Eller College of
Management, The University of Arizona SNA
Briefing July 10, 2008
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EnergyThe Problem That Wont Go Away

• Growing World Populations
• Economic Development Taking Hold
• Oil Will Dominate Energy Prices
• Oil Resources Increasingly Concentrated in the
  Middle East

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NOMINAL GASOLINE PUMP PRICE 1919-2008
NOMINAL PRICE
SOURCE EIA
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REAL v. NOMINAL GASOLINE PUMP PRICE 1919-2008
REAL PRICE
NOMINAL PRICE
SOURCE EIA
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IMPORTED CRUDE OIL PRICES NOMINAL v. REAL
1980-2008
Real Price
Nominal Price
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Basic FactsThe Setting for a Perpetual Crisis

• Economic Growth China, India, and Beyond
• A Fossil Fuel Economy World and U.S.
• U.S. A Large Net Importer of Energy
• Massive Conservation since 1970
• But Still Growing Demand for Energy
• Oil Increasingly Concentrated in the Middle East

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Basic FactsUnstoppable Growth in Demand

• China, India, and beyond
• Since 1980, in developing world, income up 40-45
• 2 billion people have modern energy conveniences
• 2 billion people have intermittent energy
  conveniences
• 2 billion people lack any modern energy
  conveniences
• World Population - 2 billion by 2030

Poor, Growing Economies Demand Liquid Fuels
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CHINAS ENERGY CONSUMPTION 1980-2005
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CHINAS DEMAND FOR OIL 1980-2007
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A Carbon Fuel Economy

• US Energy Consumption by Fuel Type - 2007

Source EIA Renewable Energy Consumption and
Electricity Preliminary 2007 Statistics  
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World Energy Use By Fuel Type2007
Source EIA International Energy Outlook 2007
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Presidential Energy Policies

• To build a future of energy security, we must
  trust in the creative genius of American
  researchers and entrepreneurs and empower them to
  pioneer a new generation of clean energy
  technology. Our security, our prosperity, and
  our environment all require reducing our
  dependence on oil.
• President George W. Bush State of the Union
  Address, Jan. 28, 2008
• We must take whatever actions are necessary to
  reduce our dependence on foreign oil--and at the
  same time reduce inflation. As individuals and as
  families, few of us can produce energy by
  ourselves. But all of us can conserve
  energy--every one of us, every day of our lives.
• President Jimmy Carter State of the Union
  Address Jan. 21, 1980

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U.S. A Large Net Importer of Energy

• U.S. Imports 34 of its Energy
• Especially OIL!
• U.S. Oil Production Stagnant
• 1970 1/3 of Oil Used Was Imported
• Today 2/3 of Oil Used Is Imported
• Still a Net Importer Despite
• U.S. Coal Production 90 since 1970
• U.S. Natural Gas Production 45 since 1970
• U.S. Hydro, Wind , Renewables All Up Sharply
• U.S. Nuclear Power 300 since 1970

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Massive Conservation since 1970

• Energy per of U.S. GDP now at 48 of 1970
  level
• Without conservation since 70, U.S. would use
  75 more energy today than it does

But Still Growing Demand for Energy

• U.S GDP 140 since 1970
• U.S. Energy Use 30-35

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The FutureThe Problem That Wont Go Away

• World Energy Use 50-60 in Next 25 Years
• Oil Output 50 in Next 25 Years
• Middle East Share of World Oil Output
• Now 40
• 2030 66

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The Policy Prospects

• Rising Prices
• Heightened Political and Military Conflict
• Fertile Fields for Political Demagogues

The Unmentionable Maybe This Problem Is Not
Solvable?