Energy Predictions for the Teens
June 04, 2010
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There are very few people who would declare that oil will be a primary energy source for the world in 2150, but everyone has a different outlook on when oil's run will finally end. I'm not going to boldly declare that oil will become obsolete at the end of this decade, but I am willing to make one big prediction:
A major paradigm shift in the energy sector will occur over the 2010's.
It seems almost inevitable in some ways. However, I think the BP oil spill is a "sea change" type of event that is going to eventually result in a bit of a divergence from our current energy model. Oil will still be around in 2020, but it's role will have changed to a degree.
I was previously an advocate of off-shore drilling, not because I support an oil-centric energy policy, but because so long as we are dependent on oil, I believed off-shore was necessary. The BP Oil Spill has dramatically changed my view. The thing I've learned (and many others are in the process of learning) is that one failure leads to such enormous environmental damage, that it could take centuries to reverse. Moreover, the costs of dealing with this oil spill are easily in the billions; maybe even hundreds of billions. In essence, the external costs of off-shore drilling might be so high, that it is not be a societally beneficial pursuit.
Yet, we can't simply go without energy. We have to find alternatives. The two most readily available alternatives: natural gas and nuclear. This isn't to say there isn't a place for renewables in America's new energy paradigm; just that their role will be limited in the near-term due to the costs. Natural gas and nuclear, on the other hand, can be produced in an economically viable manner right now. Both are superior to oil and coal in terms of negative externalities that are, inevitably, passed onto taxpayers over time.
Based on all that is occuring, my expectation is that once an economic recovery takes hold, oil prices are going to spike again. Either we have to continue extracting oil off-shore (which will become an increasingly unpopular policy) or we have to limit off-shore due to the major environmental hazards involved. If we chose the latter, the price of oil is going to climb upwards even more.
One more dynamic that I believe will accelerate --- the development of plug-in vehicles. I'm not sure how a transition to electric cars will take place, but I think in another 10 years, we will see at least 2% - 10% of the cars on the road being electric (maybe that's low-balling it, too). In this vain, I'm in the same camp as TMFDeej in that I believe electric utilities might be the biggest beneficiaries of this energy paradigm shift.
Of course, I could be wrong on all of this, but if I'm wrong, it's because other macroeconomic concerns will end up trumping this issue. In that event, continued recession/depression could drag oil demand down low enough so that the lack of off-shore supply is not a major issue. In which case, we might not see a major impetus to force an energy paradigm shift for another decade.
So now the fun part:
What are your energy predictions for the next decade?
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