The chief U.S. economist for energy giant BP says forecast models suggest world oil prices will begin to slowly rise in the second half of the year, though it’s too soon to expect any real relief any time soon.
In an address Tuesday to students and researchers at the Energy Outlook 2035 event held at the LSU Center for Energy Studies, BP economist Mark Finley said “corrective forces” are building and that supply and demand should begin to balance out, provided global demand continues to increase at the rate it has for the past year.
“But even then, we’re not out of the woods yet,” Finley said. “For the market to truly rebalance you need to recalibrate supply and demand and address all the surplus in reserves.”
Oil prices fell below $30 per barrel in February, and currently are averaging around $36 per barrel.
While world energy prices are uncertain in the near term, the long-term future is generally positive, according to BP’s Energy Outlook 2016, which is a 20-year forecast. According to the report, global energy demand is expected to increase more than 30%—about 1.4% per year—by 2035, with emerging economies fueling most of the growth.
Fossil fuels are projected to remain the dominant source of energy powering the global economy, and will account for an estimated 80% of total energy supply by 2035, down from 86% in 2014.
Natural gas will be the fastest growing fossil fuel, and supplies of liquefied natural gas are expected to increase more than 40%. That projected growth is based on the assumption that many of the proposed liquefied natural gas processing facilities around the U.S., several of which are in Louisiana, will be completed in the next few years.
“If you look at the figures you see that half the projected growth in LNG happens by 2020 so those are plants that are already under construction,” Finley said. “But we don’t assume every proposed plant will get built.”
Among the other projections in the BP forecast: energy efficiency will increase over the next 20 years, with the average automobile’s fuel efficiency increasing from 30 miles per gallon today to 50 miles per gallon by 2035; renewable energy will increase from about 3% of the world’s total energy sources to 9%; and demand for coal will fall off sharply.
—Stephanie Riegel
