The U.S. Department of Energy’s Energy Information Administration released its 2014 International Energy Outlook while I was inconveniently located in mainland China and unable to access this blog.
It turns out that that’s okay–the EIA has changed to doing a full report in odd-numbered years and a shortened version in even number years. So the 2014 report does not cover very much of what interests me. It is focused instead on production of (and a bit on demand for) oil and other liquid fuels.
I don’t know when they finished writing it, but it looks like they hit the publish button about two minutes before the price of oil started falling through the floor.
“In the IEO2014 Reference case, world oil prices fall from $113 per barrel (2012 dollars) in 2011 to $92 per barrel in 2017, then rise steadily to $141 per barrel in 2040.” The price of Brent right now is about $47.
You’ve gotta feel for these guys. They probably thought they were being brave to put a decline in their reference estimate. Their Low Price estimate showed prices falling to $70 by 2016, and again they probably thought they were sticking their necks out.
As for their macroeconomic outlook, (I don’t mean to sound snarky–I like what these people do) they finally noticed the slowdown in India and started including it in their models for growth. Unfortunately, my models think they did this right when India hit the floor. Their new prime minister Modi, in my opinion, is going to spur growth there almost immediately. They took the opposite tack on Brazil, projecting strong growth there just as the Brazilian economy took a nose dive. You can’t win.
As for China, they sold 18 million new cars last year and the EIA quite properly notes that liquid fuel consumption will probably double by 2040. (I wonder if that will show up in their 2015 estimates of future global energy consumption…)
I think the overall situation is too (please forgive me) fluid to really make strong assertions on liquid fuels. All consumers are benefiting from Saudi Arabia’s war on American shale. As a consumer, you should root for a long and bloody struggle. As an environmentalist, I can only say this is the perfect time to end subsidies and raise taxes on liquid fuels. When prices are low, people won’t notice.
Speaking of which, is there a luckier politician anywhere than Indonesian Joko Widodo (Jokowi)? He took office hoping to find a way to lower fuel subsidies, which take up a fifth of Indonesian government spending. The crash of oil prices allowed him to remove the subsidies altogether–and right now fuel prices in Indonesia are lower without subsidies than they were a month or two ago with subsidies. If Jokowi spends this windfall properly, Indonesia might replace Australia as ‘the lucky country.’
I like him because he reminds me a little of Barack Obama. Pity Obama never had that kind of luck.