BP world energy review

This posting is contributed with compliments from Julian.... :-)

From the 57th annual BP statistical review of World Energy, here are some summaries:

1. High oil prices are not because of speculation. Speculation might make the price swings more volatile but the push in price is due to economic fundamentals. Global energy growth has been above average for 5 consecutive years but at the same time energy supplies have not been able to catch up. Britain's North Sea oil field recorded world's largest decline in production, ever! Declining by 10% in 2007. Production in Russia is declining. Nationalism is on the rise and this will negatively impact production as some countries like Venezuela are not exactly that good in increasing production output.
2. The world is not running out of hydrocarbon. We currently have 40 yrs of proven oil reserve, 60 yrs of natural gas and 130 yrs of coal. So we still have enough reserve, the problem is more political.
3. Alternative energy comprises of around 2% of total energy consumption. So switching to alternative energy is not as easy as it seems.
4. Conclusion: let the market adjust itself. At these prices, oil consumption would definitely decline as individuals/nations are taking steps in reducing oil consumption. At the same time, at these high prices, nations will try as much as they can to sell more oil to reap the immediate reward. This will help put pressure on demand.

For more, go to BP.com