West Texas Intermediate (WTI) reached a multi year high earlier this month at $77.06, not since Oct 2004 has WTI achieved the years high so late in the year. In Oct 2004, WTI was trading at $56.43 and was in the beginning phase of a multi year rise which eventually reached $147 on July 15, 2008. Similar to 2004, WTI is in a multiyear rise supported by global industrial rebound, however, added to this phase of rising prices is technology driven emerging market growth and demand unlike anything ever witnessed in human history. Economic growth and development outside the United States from emerging and developing economies will pressure oil prices and resources beyond supply capabilities.
Oil will continue to provide the bulk of the world’s energy needs in 2040 and the Untied States along with it’s oil producers and partners will lead the way in meeting this demand.
Developing economies represent 80% of the world’s population and over the next 25 years these emerging and developing economies will account for 94% of the world’s population growth. Current global population is approximately 7.3 billion with global population forecast to reach 9.2 billion by 2040. Yet, 1.7 billion of that growth will be from developing economies as these economies will demand energy to support their growth and development.
Global GDP currently stands at 87 trillion USD with the Untied States accounting for 25% or 21 trillion USD. However, China GDP for 2018 is forecast at 14.5 trillion and will grow to 21 trillion by 2023 and forecast to overtake the Untied Sates by 2025. Global GDP is expected to more than double by 2040 with 90% of this growth from developing countries. And what is really scary, its not only China that will lead the way but other economies such as India, Indonesia and surprisingly, Africa.
All these countries will require and demand automobiles and the necessary fuel to run them. Currently the Untied States as 270 million passenger vehicles while China at present has 116 million passenger vehicles. By 2040, the United States is forecast to have 320 million passenger vehicles while China is forecast to have 450 million passenger vehicles. By 2040, the largest sector consuming energy will be the transportation sector. Furthermore, by 2040, less than 20% of passenger vehicles will be electric vehicles. With global oil demand remaining firm into the decades ahead, oil prices are guaranteed to continue to rise well into the 2050’s. Oil will continue to provide the bulk of the world’s energy needs in 2040 and the United States along with it’s oil producers and partners will lead the way in meeting this demand.