This year oil prices have been on a rollercoaster ride. The reasons for this are varied including volatile financial markets, increased bad weather events, and supply reduction, coupled with increased demand. Economic growth around the globe in developed and
developing economies alike has kept the world needing more energy. However, to meet this, supply of oil has just barely managed to keep up. And oil prices seem set to rise further.
Looking forward and trying to understand what the global energy markets are going to look like during the year, here’s what this short future outlook on global energy market in 2008 contains:
It is highly likely that global oil markets will remain stretched out, as global oil demand has continued to increase at a much faster rate than oil supply outside of the Organization of the Petroleum Exporting Countries (OPEC), putting pressure on OPEC and inventories to bridge the gap. Additional fundamental factors contributing to price volatility include ongoing geopolitical risks, OECD inventory tightness, and worldwide refining bottlenecks. As a consequence, crude oil prices are expected to remain high and volatile.
Working gas in storage was 3,277 Bcf as of October 10, 2008 This indicates that abundant level of storage and limited fuel switching capability have mitigated the impact of the recent price increases in petroleum markets on natural gas prices. This trend is likely to continue. The Henry Hub spot price is expected to average about $7.30 per thousand cubic feet (mcf) in 2007 and $8.01 per mcf in 2008.
The International Energy Agency (IEA) forecasts that energy demand between now and 2030 will increase by a half, an annual average increase of 1.6%. Two-thirds of the new demand will come from developing nations, with China accounting for 30%.
What is new is the focus on the environmental impact of consuming as much energy as we do in the way that we do. And that is what provides the hope that the world can modify its demand for energy, or at least its fossil-fuel energy demand, through efficiency and conservation.
No doubt that the coming year is likely to witness the world using more coal and more
natural gas. The expansion of nuclear energy is going to continue to be constrained by the
length of time it takes to build plants and get the regulatory approvals to operate them.
Safety concerns further add a roadblock to the entire process. The use of biofuels and renewable alternatives such as wind and solar power will grow rapidly, but they have such a small base of use they will not replace significant quantities of fossil fuels any
time soon--nor diminish the competition between countries to secure supplies.
View Table of ContentsPages: 21
Publication Date: October 2008
Publisher: Energy Business Reports
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