Managing future energy needs is certainly a global challenge that requires the cooperation of many named players both on a small and large scale. It has been estimated that global demand for primary energy is set to grow 55% by 2030 and that $22 trillion of new investment is need to meet future energy forecasts. The main player in providing future energy security can be argued to be OPEC as they control the production of over 2/3’s of the world’s supply of oil, therefore leading them be price makers in the industry.
OPEC is considered to be the most important player in global energy provision, it currently consists of 12 members and was created in 1960 mainly to protect the interests of member countries and to stabilise oil prices for a regular supply to oil consuming countries. However, OPEC’s obligations have been controversial as they have been accused of holding back on production of oil and gas in order to drive up prices, therefore using the market mechanism of demand and supply to increase profits for member states.
Currently it has been proven that collectively, OPEC has stored 900,000 million barrels of crude oil, they own 78% of global resources and have a combined market share of 45% for oil and 18% for gas. This inherently makes them the largest producer of fossil fuels in the world meaning they will have a large if not absolute say in future energy provision and energy security. The responsibility of oil distribution will then fall on OPEC when supply of oil runs low leading to a bidding system for allocation of oil to where demand and price is highest.
Another large player involved in providing energy security for the future is multinational oil companies; they are involved in the exploration and extraction of oil as well as transporting and refining the oil to consumers meaning they, as well as OPEC control the prices directly to consumers. Most of the top 20 oil companies in 2005 were state owned with companies such as Saudi Aramco in Saudi Arabia and PDV in Venezuela, this could be beneficial for domestic industry as they may charge less, stimulating the economy with lower production costs.
However, many of the largest oil companies are relatively free of direct political influence and are therefore driven by the market mechanism leading to higher prices, above production costs. An example of a petro chemical company that has a direct impact on us in the UK is Gazprom in Russia. It solely controls one third of the world’s gas reserves and accounts for more than 92% of Russia’s gas production, but more importantly it provides 25% of the EU’s natural gas as we are consistently becoming net importers.
The security of the energy provision is open to risk as Europe’s fear is that Russia will be able to name its price for gas because Europe is predominately dependent on its supply. In addition, the reliability is further doubted since Russia temporarily shut off gas supply to Ukraine in 2006 and therefore the whole of Europe. Fossil fuels are of course a finite resource meaning they will one day deplete to such an extent that it will not be cost effective to extract and refine to sell.
This insinuates that it is the combined role of governments and oil producing companies to innovate and invest in new technology to sustain increasing energy demands. International Governments is the last and one of the main players in providing future energy security. Governments have the option of allowing oil companies to further exploit their own environment in order to increase oil production such as the case with the province of Alberto. It is estimated up to 2. 5 trillion barrels of are held within the sedimentary oil-shale – more so than in Saudi Arabia.
This may relieve pressure for rising energy demand in the US as Canada does in fact have a surplus of primary energy. It will also relieve the US from its dominant reliance on the unreliable Saudi Arabian oil reserves with growing political challenges and the threat of terrorism and piracy. However, environmentalists see the exploitation of oil-shale are sands as a disaster in the making, not only does it already have detrimental environmental scars but with current technology, huge amounts of energy are needed in heating the sands to extract the oil (every 3 barrels of oil produced requires 1 barrel to be burnt).
Conversely, Governments may opt to incentives conservation of energy through fuel duties or green taxes and emission trading as it leads to industries investing in cleaner technology. In addition, investment in greener fuels such as renewable and nuclear energy is a way for governments to secure energy provision in the future as it can be sustainable and everlasting.
In conclusion, each player has a unique role in providing future energy security either with price stability with OPEC, investment into greener technology with oil companies and correct management and legislation from governments to both the exploitation of their environment and their fiscal system in incentive taxation. All in all it depends on the magnitude of integration of all these ideas brought forward that will secure actual energy provision in the future and allow for a sustained and secure increase in consumption of energy.