And the long term trend is this: the world economy will recover. The future is not cancelled. And the balance of energy supply versus demand will continue to change in a fundamental way.
In my lifetime the world’s population has doubled to more than 6 billion people. At the current rate, it will exceed 9 billion by the year 2050. The current maelstrom may interrupt but will not stop the movement of one third of the world’s population from a rural way of life to an urban one.
Over the next decade around 500 million households will join the $5,000 income band; half of these in just two countries – China & India.
With this growth and improvement in living standards comes increasing demand for energy. Energy is fundamental to life. Energy underpins every modern, prosperous and growing society.
Let me be clear about the scale of the change we are talking about. According to IEA projections, we will need about 40% more energy in 2030 than we consume today. And, if current trends continue, we will double today’s demand by the middle of the century.
That means we will have to invest more than $26 trillion between now and 2030 to meet future demand. It is an immense sum. It’s eight times more the total US federal budget of last year. The fact is, energy producers must invest more than 1 trillion dollars every year.
So we need to think about how the world is going to respond to this step change. The first thing to say is that, although it’s a big issue, it is not an insurmountable one.
We have the natural, human and financial resources to meet the world’s growing need for energy.
It’s not true to say, for example, that we are running out of hydrocarbons. There are nearly 42 years of proved oil reserves left in the ground and 60 years of natural gas.
Put another way, as of today, the world has produced around 1 trillion barrels of oil. We’re sitting on another 1 trillion barrels of proven reserves – with another trillion barrels which we know to exist but which are not yet commercially viable.
On top of that, there are vast quantities of unconventional hydrocarbons including oil sands, heavy oil and unconventional gas.
So when it comes to producing more oil to meet demand, the problems are not below ground, they’re above ground. They are human, not geological.
(full disclosure: BP provided a script of Hayward’s speech in advance so these posts are based on that after he says them with minor tweaks. In other words, I can’t really type this fast and accurately).