Ikelic - Alliance Digital Repository

GENERAL
TWO DIFFERENT FUTURES FOR OIL AND
ALTERNATIVE FUELS DESCRIBED
Royal Dutch/Shell's P. Kassler reminded last
fall's "Oil and Money"
conference that the 1980s
were a period of profound, even revolutionary
change in many parts of the world. The end of
the cold war and the disintegration of the Soviet
Union has created entirely new relationships all
over the world. Political liberalization has
resulted in free elections and civilian govern
ments in much of Latin America, parts of East
Asia and in South Africa.
Equally
profound changes have occurred in the
world of economies and markets. Liberalization
of markets, to varying degrees, is now being
adopted as the received economic wisdom al
most everywhere and has become the basis of
economic policies.
Kassler points out that these major political and
economic reforms are going on against a back
ground of an inexorably increasing
world popula
tion and growing concern for the environment,
both of which will strongly influence the future
demand for oil.
Shell companies have developed two alternative
scenarios as to how the world could respond to
these global reforms. Some will see liberalization
as providing promising opportunities leading to
success and rewards which in turn will reinforce
the process--a "New Frontier"
scenario. Others
will see it as a threat to their position and will
resist It a "Barricades"
In "New Frontiers,"
scenario.
liberalization continues and
spreads as many seize the considerable oppor
tunities to be taken. Economic and political
reforms are expected to work, in the sense of
improving
societies'
ability
to create wealth for
their members. Fast economic growth is sus
tained in the developing countries. As a result,
business is stretched in an environment of relent
less competition and innovation. To fuel this
growth, the demand for energy is high.
1-3
In "Barricades,"
liberalization is resisted and
restricted because people fear they might lose
what they value most-jobs, power, autonomy,
religious traditions and cultural identities. This
creates a world of regional, economic, cultural
and religious division, in which international
businesses cannot so easily operate. A new
crisis in the Middle East gives governments the
opportunity to implement drastic and irreversible
measures, heavily taxing and regulating the use
of energy.
World Population and GDP per Head
The difference in economic growth patterns be
tween these two scenarios leads, by 2020, to two
very
different pictures of the world when ex
pressed in gross domestic product per head.
In "New Frontiers,"
liberalization leads to growth
rates of 5-6 percent in non-OECD countries,
similar to those of the 1960s. By 2020, more than
half of the world's population enjoy "middle"
comes. As a result of this wider economic
development and better education, population
growth begins to slow down.
By contrast, under "Barricades,"
the economic
growth rate in developing countries remains at
some 3 percent per year, similar to the 1980s. By
2020, almost 90 percent of the world population-
some 8 billion people by then-have low incomes,
and restricted access to basic amenities (clean
water, electricity, etc.) while the remaining
10 percent is split evenly between middle and
high income groups.
World Energy Consumption 1960-2020
For developing countries, the difference in the
rate of economic development leads to contrast
ing energy demand between "Barricades"
"New Frontiers."
in
and
In the latter scenario, by 2020,
developing countries in Southeast Asia, including
China, will have reached similar per capita levels
of energy use to that of Italy in 1960. In spite of
the improvements in energy efficiency which are
THE SYNTHETIC FUELS REPORT, JANUARY 1995