Energy in the 1980s - The world energy outlook to the mid-1980s: the effect of an alternative supply path in the United States

A brief review and interpretation of regional and world-wide trends in total energy consumption and its composition since the end of World War II is given. A review of energy-consumption projections into the 1980s — world-wide and regional — focuses on the role of international trade in oil in achieving supply—demand balances. The prospective position of the U.S. as a major oil importer is emphasized. An analysis of the sensitivity of world supply prospects to alternative assumptions concerning the growth of indigenous sources of supply in the United States of America and Western Europe is presented. The post-war growth rate in world energy consumption averaged out to over 5% per annum. Marked shifts in regional shares and variations in regional growth rates have occurred, but regional differences in the level of per capita energy use, while narrowing, remain conspicuously wide. The sharp relative decline of coal during this period was accompanied by a dramatic relative increase in both oil and gas. The rapid growth of world energy consumption as a whole, the continued shift toward oil and the rising volume of U.S. oil imports all failed to be adequately anticipated in past energy projections. A standard projection to the mid-1980s shows: world-wide energy growth of between 5-J- and 6% ; an even faster growth rate for oil, resulting in about 115x10® barrels (18.3 x 10® m3)/day in 1985 (compared to 53 x 102 b (8.4 x 104 m3)/d in 1972); and the addition of the U.S. to the ranks of the major oil importers. The Middle East, along with areas of lesser reserve holdings, is in all likelihood physically capable of accommodating expected oil demand to the mid-1980s. But the acute degree of dependence that this would pose for major consuming regions prompts the question of how a greatly expanded indigenous producing capability in the U.S. could blunt the one-sidedness of the demand-supply picture. Recently completed research suggests that, within an appropriate policy setting, the U.S. could probably meet all but 20% of its oil and gas internally by 1985 - and do so at real prices no higher than the $6/barrel ($38/m3>) delivered price rapidly being approached by Persian Gulf crude. Such a development, along with whatever contribution can be made by Western Europe’s own petroleum-producing capability, can perhaps introduce a stabilizing element of major importance into world energy flows.