Energy & Economic Analysis for ExxonMobil – All Energy Investment Opportunities 2015 – Compressed Version – Author : James Dean @ iHumanMedia.com
Energy is the basic element necessary for people to achieve economic prosperity through business, R&D innovations and manufacturing. In 2014, about 80% of U.S. gross petroleum imports were crude oil. An estimated 46% of total imports were processed in U.S. refineries.
Currently, the global energy landscape is hostile to many investors, particularly with OPEC’s artificially low oil prices designed to ‘discourage’ U.S. domestic competition. Although, energy prices will rise dramatically within the next 24-months, helping to restore the need for new sustainable energy resources and provide investors a healthy ROI.
The many potential sources of energy can be non-renewable fossil fuels including oil, nuclear, coal, natural gas or renewable energy alternatives such as wind and hydro turbines, PV solar cells, and biofuel (ex. algae, cellulosic biomass, Jatropha, palm oil). Regardless of where energy is derived it always equals economic power for the increasing populations worldwide. Its always better to build an energy independent nation where external energy resources subject too geopolitical crisis can be eliminated adds Mr. Dean. The increasing scarcity of clean water is also a key factor when discussing energy production and domestic economics.
By 2025, the total world population will jump to over eight Billion people, creating an energy hungry workforce of the nearly 1.2 Billion new middle class people. House hold and food production are by far the two largest energy demands.
Ultimately by 2048, our human population will reach over 9 Billion, beyond the planets capacity, thus causing severe stress on available resources worldwide.
China alone represents 450 million emerging middle class workers with India adding 535 million to the total population. This rapid growth will nearly triple worldwide energy and food demands within the next 15 years. Agriculture is a major concern.
Today, the United States is addicted to oil. We consume over 22% annually of the world’s total oil production or 19.2 million barrels per day. Yet the U.S. maintains only 4.5% of the world’s population, a minute fraction in comparison. America is responsible for over 25% of the worlds CO2 greenhouse gas pollution.
To fully understand the urgency of the “peak oil” issue consider that despite trillions of dollars in debt, the United States still imports 40% of its oil at a cost of over $310 Billion per year. Increase costs are due to unstable regions including South America, Africa, Venezuela and the Middle East that control nearly 55% of world oil supplies. A dangerous level given these hostile countries.
By 2025, crude oil prices will remain over $115 per barrel by most estimates. Today, the artificially subsidized oil prices at the pump are unsustainable.
Let’s also consider the fact that the majority of oil wells today have reached their “peak production” (ExxonMobil 2015). ExxonMobil is already working on algae fuel.
A source of 10% of U.S. oil supply comes from Mexico. As of last year Mexican oil producer Cantarell’s production fell about 9.6% every quarter. In the third-quarter, Cantarell produced less than 1 million barrels daily for the first time. Although, its among the top three largest oil reserves worldwide, Cantarell is declining in production, due to aging oil wells. This has threatened 40% of the Mexican government budget and available revenue. The implications for the U.S. are significant. Mexico once provided on average 1.2 million barrels of oil per day, making it the largest supplier after Canada Athabasca Oil Sands and Saudi Arabia.
It is relatively straight forward to calculate that from the existing aging oil well data the world petroleum reserves life cycle has already reached “peak oil” with production declining in the following years. Therefore, a steady decline in oil output worldwide will be unable to cost effectively meet the exploding middle class population needs driving up the overall price of energy and commodities.
For example between 2002 to 2035 the major oil producing countries will have seen output declines as follows;
Canada (-62%), Mexico (-92%), USA (-90%), Brazil (-64%), Venezuela (-46%), Former Soviet Union (-70%)
Iran (-62%), Iraq (-45%), Kuwait (-44%), Oman (-81%), Qatar (-82%), Saudi Arabia (-48%), UAE (-65%), Nigeria (-69%), Libya (-78%), China (-63%) and Indonesia (-71%)
Where do we find enough resources to meet the world’s energy demands?
The answer lies in developing a mix of renewable energy sources including wind, solar, hydro and bio-fuels that also complements sensitive global environmental warming issues requiring less carbon based, cleaner sustainable sources. The challenge now is to manufacture and deliver alternative energy via efficient grid networks or infrastructures at prices which are competitive with oil, coal, or natural gas.
Over the past 12 months, the ability to further develop these clean renewable technologies has attracted over $180 Billion of R&D investments capital worldwide. The clean energy market has seen annual growth between 25% within niche sectors. Particularly wind and hydro turbines, PV solar cell and bio-fuels such as algae are receiving significant and increasing capital. Elon Musk, Tesla is a leader !
For example, China has a $2 trillion surplus and has already launched its stimulus plans to spend $558 billion with a large portion of these funds targeted at renewable-energy projects. The Chinese goal is 100 GW of wind power by 2020.
China’s wind capacity is expected to grow 300% by 2017. That’s more than twice the estimates for the United States. China’s year-to-year growth average is already over 30% for the wind turbine energy sector. And to top it all off, China is working with German and U.S. manufacturers on 34 new wind farms planned between now and 2014. Some industry leaders include Sinovel Wind, General Electric, Vestas Wind Systems, Shanghia East Sea Bridge Wind Power, among others.
By 2012, China’s solar power capacity is set to increase by 255%, thus achieving 37% annualized growth average. China is already building a 100-megawatt solar power station, the world’s largest. China, U.S. and Germany are now the global leaders in thin photovoltaic (PV) solar cell manufacturing. Since 2006, China alone has already spent over $180 billion dollars to develop renewable energy sources. Some industries leaders include LDK Solar, First Solar, SolarWorld, and Suntech Power Holdings, among others.
China’s automobile ownership population is anticipated to grow within 15 years by more than 350 million with India at 200 million new vehicles demanding more transportation fuels and advanced technology. Both countries are already investing billions of dollars in hybrid electric vehicles manufacturing, smart grid networks and battery technologies.
Think about it. The world currently consumes about 85 million barrels of oil per day. By 2025, global economic needs are projected to reach the equivalent of approximately 124 million barrels a day while oil reserves decline and the demand for food and clean water resources doubles.
Recently, we have seen the acceleration of leading energy companies (Exxon, Chevron, BP, Eni S.p.A, Enel, Boeing, PetroChina, Sinopec, Gazprom, LUKOIL, Brazilian Petro, Royal Dutch/Shell, Petrobras) and governments investing billions of dollars in promising joint biofuel and biomass cellulosic production ventures within sectors such as switch grass, wood, African palm oil, algae and Jatropha. Much of the VC money is invested in emerging growth biomass cellulosic enzyme leaders such as Dyadic International, Synthetic Genomics, Iogen Corporation and Genencor, among others.
Promising energy sectors such as these can immediately impact the environmental climate issues by reducing CO2 emissions over 950 million metric tons of greenhouse gases. As crude oil prices long-term continue to ease upwards consistent with economic recovery growth (China, India, Brazil, Australia, Singapore, Africa) there’s a need to accelerate domestic demand for sustainable energy in America. Beyond 2018, clean alternative energy could save the average American about $3,000 per auto owner in fuel costs, conserve 2 billion barrels of oil per day and lay the foundation for energy independence stopping the flow of billions in revenue flowing out of the United States. Innovative economic growth keeps our money local also generate millions of new jobs for the middle class people, and stimulating new business innovations through greater capital investment in American industry.
Demand for energy and petrochemicals used for agriculture is also growing rapidly. Food supply for the increasing population has significantly accelerated its impact on limited non-renewable resources. Emerging middle class markets such as Brazil, China, India, Indonesia, Korea, Former Soviet Union, Cambodia, Argentina, Singapore, and Malaysia are rapidly demanding more energy. These emerging countries coupled with U.S. markets all represent significant growth opportunities within niche alternative energy sectors for both large and rising companies.
Clearly research indicates high demand, keeping the price of oil and other fossil fuels at a premium will inevitably remain. It is also becoming a key driver in the global shift towards increasingly cost competitive alternative energy and economic resources.
The combination of increasing global energy demands, coupled with declining peak oil supplies, and emerging industrialized pressures will continue to force prices higher and, in turn, continue to accelerate the development of cost competitive alternative energy sources. As many of the traditional large energy companies invest heavily in emerging clean technologies working in partnership with innovative early stage companies; we will see strong investment opportunities. An in-depth understanding of energy markets and identifying potential winners and losers will be the key to maximizing investment returns.
About Author : Mr. James Dean is a respected analyst, innovative expert in sustainable industries and mobile technology with over 30-years experience. He is a published business author worldwide. Mr. Dean holds advanced business and technical degrees from Boston University. Visit: www.iHumanMedia.com