Oil and gas producers seemingly have settled on a strategy. OPEC and Russia will limit production and let prices rise during a global war-famine-pandemic. OPEC sets the price umbrella while the Russians discount the price for obvious geopolitical reasons. All other big oil producers adhere to pricing and supply discipline knowing that OPEC’s costs of production are so low that OPEC can undercut any oil producer that ignores pricing discipline. The big US producers say they will not expend capital to increase supply when they lack assurance of continued demand. As for high prices, they result from competition in the market, the oil CEOs say. We all know how this will end, as it always does: demand will weaken and producers who would rather get a lower price than let some other producer get the business will cheat. But not for a while.
What about energy demand over the long term? Most forecasters predict global demand through 2050 will grow at around 1% a year or less. Some get their numbers from econometric models, others from a painstaking analysis of end-use demand. We suggest a simple way to check out those projections using another projection likely to be reasonably accurate, namely population growth. Figure 1 compares rates of growth for world population and world energy usage. (Actual numbers for 1950, 1975, and 2000, and estimates for 2025 and 2050 (from standard sources)).
Figure 1. Annual rates of growth (%).
After OPEC’s assault on the international…
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