Daniel Yergin on the Future of Oil

It’s interesting to hear Daniel Yergin analyze global energy markets. He gives a realpolitik analysis, that leaves you thinking Henry Kissinger could have said the very same thing. Yergin is the pulitzer prize winning author of The Prize and approaches oil and energy issues like an economist should and looks at it primarily from a supply and demand perspective. In his interview with the McKinsey Quarterly, he lays out the continued importance of oil through 2030:

You can forget at times that you can talk about our energy future for over five minutes and not talk about climate change. Yergin makes all sorts of predictions, such as increased oil production in the Western Hemisphere and demand for Middle Eastern oil increasing coming from the East, as well as some of the geo-political risk that we might face.

His analysis is very sobering, because so often people who look at these issues from a green perspective regularly talk about the increasing role of renewables. But, in fact, if the economists are right, that’s really not what is going to be driving our energy future. It will all be about supply and demand.

Amory Lovins is an economist that focuses on energy issues, but pays much more attention to climate change and renewables. Here’s what Lovins said about the battle between renewables and fossil fuels in an interview with Yale360:

Well, one system is dying and others are struggling to be born. It’s a very exciting time, but I think the transitions that we need in how we design vehicles, buildings, and factories, and how we allow efficiency to compete with supply, are well under way. Most of the key sectors are already at or past their tipping point. And it’s clearest for oil, but will become clearer for coal that the stuff is becoming uncompetitive even at relatively low prices before it becomes unavailable even at high prices. It’s the whale oil story all over again. They ran out of customers before they ran out of whales.

I’m not sure Yergin sees our oil economy as quite so fragile.



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