Section One

More documents

Recommendations

Info

eing raised for private borrowers. In turn, this puts a drag on the economic recovery. At the same time, nervousness in financial markets may reduce confidence in indebted countries, raising the cost of borrowing in these nations, which then curbs economic recovery. There are also a number of potential medium-term consequences from the global financial crisis. Bank lending is not expected to recover soon. Furthermore, higher government debt and the need to cut expenditure could slow down productivity growth. In general, increased risk aversion, the necessity of banks to deleverage and capitalize, as well as disenchantment with financial innovation that contributed to boosting liquidity, points to the possibility of higher borrowing costs for both developed and developing countries. This could lead to a decline in the potential growth rate, since financial services are critical to the smooth functioning of an economy. In many respects, pessimism over longer term global economic growth potential can be traced to concerns that a backlash against globalization may come as a result of the disillusionment with the vulnerability of open markets, in particular capital market liberalization. Increased protectionism and more regionalism could endanger the present expectations of a benign recovery in global trade and economic welfare. For all of these reasons it is important to consider alternative, lower economic growth paths from the Reference Case assumptions. The assumption made in the lower economic growth scenario is for each region to witness 0.5% lower growth than in the Reference Case throughout the projection period. This does not, of course, preclude the possibility of more severe short-, medium- or long-term downward pressures upon growth. On the other hand, uncertainties over economic growth can also point to upside potential. A central focus of such a higher growth scenario would be how this might translate into oil demand, as well as the call on OPEC crude. The drivers behind such higher economic growth could be several. Firstly, in the coming years, emerging markets that are not as financially constrained as major OECD regions increasingly become the motors of world growth. The shift in economic weight to emerging markets, especially those in Asia, will have far-reaching economic and geopolitical consequences, some of which are slowly beginning to unfold. The emergence of the G-20 as the premier economic forum and the recognition by the G-20 in its Pittsburgh Summit Leaders Statement in September 2009 that “critical players need to be at the table and fully vested in our institutions to allow 135 Chapter 4
136 us to cooperate to lay the foundation for strong, sustainable and balanced growth” is an acknowledgement of the increased economic weight of emerging economies. At the global level, in the coming years strong economic growth may require a rebalancing of growth in deficit countries, such as the US, the UK and Spain, from domestic consumption to exports, while a reverse process would be needed in surplus countries such as China, Japan and Germany. US saving rates have risen recently and this single factor could impact growth substantially given the fact that private consumption accounts for 70% of GDP. It is likely that the savings rate will remain higher than in the years preceding the crisis, due to the necessity for private households to deleverage. Meanwhile the Chinese government remains committed to fiscal expansion and to the aim of rebalancing growth towards domestic consumption, and in the higher economic growth scenario, this would provide an important growth impetus. As with the lower economic growth scenario, the stronger growth that emerges in the higher economic growth scenario is a credible alternative to the Reference Case. Therefore, the assumption is made that average global growth over the period is 0.5% p.a. higher than in the Reference Case throughout the projection period. In turn, there is an assumed correction of oil prices in accordance with demand developments. 51 This gives rise to some feedback impacts upon both demand and supply, but the dominant effect remains through the alternative economic growth assumptions. The results for these two scenarios are shown in Tables 4.3–4.6, and summarized in Figures 4.2 and 4.3. In the lower growth scenario, demand by 2035 reaches 100.6 mb/d, or about 9 mb/d lower than in the Reference Case. 52 Because of the slightly softer oil prices, non-OPEC oil supply is lower than in the Reference Case by about 2 mb/d by 2035. This means that the call on OPEC crude oil by 2035 is 7 mb/d lower than in the Reference Case. In this scenario, the need for OPEC crude oil rises slowly to around 32 mb/d, where it stays approximately flat. In the higher economic growth scenario, global oil demand rises more swiftly, to reach over 112 mb/d by 2030 and 118 mb/d by 2035. Part of the pressure upon the demand rise is ameliorated by the higher oil price. Of course, this scenario would need to be placed into the context that such a strong demand increase would likely cause concerns over rising imports, which, in turn, would likely lead to new policies being introduced to limit growth. Nevertheless, it demonstrates the innate uncertainty over future oil demand due to economic growth, from both the upside and downside. In this scenario, OPEC crude supply would need to rise to 45 mb/d by 2035.
Page 1 and 2:
Section One
Page 4 and 5:
Chapter 1 World oil trends: overvie
Page 6 and 7:
Box 1.1 Regulatory reform in the en
Page 8 and 9:
commodities, the OTC market also in
Page 10 and 11:
IHS CERA upstream capital cost MOVE
Page 12 and 13:
in the strength of the dollar: in N
Page 14 and 15:
to this, there is the dominance of
Page 16 and 17:
Although these reduced growth targe
Page 18 and 19:
Global and regional population leve
Page 20 and 21:
average of 67% of the population in
Page 22 and 23:
Table 1.3 Population by urban/rural
Page 24 and 25:
Figure 1.8 Real GDP by region in 20
Page 26 and 27:
Policies The Reference Case retains
Page 28 and 29:
electric vehicles, which focuses on
Page 30 and 31:
Box 1.5 Shale gas: recent developme
Page 32 and 33:
40 years. While the early high perf
Page 34 and 35:
Box 1.6 After Fukushima: unclear fo
Page 36 and 37:
is Japan itself, which has been ask
Page 38 and 39:
Figure 1.13 Fossil fuel use per cap
Page 40 and 41:
Table 1.6 Medium-term Reference Cas
Page 42 and 43:
Table 1.7 World oil demand outlook
Page 44 and 45:
low, and well below levels seen in
Page 46 and 47:
has also taken into account the pot
Page 48 and 49:
stronger than previously expected s
Page 50 and 51:
d 0 Conventional Figure 1.22 US & C
Page 52 and 53:
Upstream investment Figure 1.25 mb/
Page 54:
different picture. By 2035, Annex I
Page 57 and 58:
78 0 Figure 2.2 The distribution of
Page 59 and 60:
80 Table 2.1 Vehicle and passenger
Page 61 and 62:
82 0 1970 1974 1978 1982 1986 1990
Page 63 and 64: n (millions) 7,000 84 0 China Brazi
Page 65 and 66: ion (millions) 7,000 6,000 5,000 4,
Page 67 and 68: 88 Conventional powertrain technolo
Page 69 and 70: 90 acquisition costs, and the lower
Page 71 and 72: 92 Figure 2.9 Increase in oil consu
Page 73 and 74: 94 rose by an average of more than
Page 75 and 76: 96 Table 2.10 Oil demand in rail an
Page 77 and 78: 98 Table 2.13 Oil demand growth in
Page 79 and 80: 100 Table 2.14 Oil demand in the pe
Page 81 and 82: 102 2.5 2.0 10 1.5 81.0 60.5 0 mboe
Page 83 and 84: 104 Figure 2.15 Share of industry i
Page 85 and 86: 106 Figure 2.16 Figure 2.16 Oil use
Page 87 and 88: 108 Table 2.19 Oil demand growth in
Page 89 and 90: 110 from 63% to 10% in Southeast As
Page 91 and 92: 112
Page 93 and 94: 114 In Canada, although the Outlook
Page 95 and 96: 116 Non-OPEC Latin America’s prod
Page 97 and 98: 118 additional supply of 180,000 b/
Page 99 and 100: 120 limiting factor for feasible su
Page 101 and 102: 122 Table 3.4 Medium-term non-OPEC
Page 103 and 104: 124 some deposits will not be suffi
Page 105 and 106: 126 1.8 mb/d in 2010, to 2.7 mb/d i
Page 107 and 108: 128 Of utmost importance, in respec
Page 109 and 110: 130 influences and, therefore, brin
Page 111 and 112: 132 early support given to Brazil
Page 113: 134 the call on OPEC crude by 2035
Page 117 and 118: 138 Figure 4.1 Table 4.6 Oil supply
Page 119 and 120: 140 COP-16, held in Cancun at the e
Page 121 and 122: 142 in Article 4, paragraph 8, of t
Page 123 and 124: 144 identifies sustainable long-ter
Page 125 and 126: 146 Beyond the oil sector, there ar
Page 127 and 128: 148 other international research an
show all

Section One

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?