There is great disparity in the distribution of wealth among nations of the world. National well-being, as measured by commonly accepted indicators such as infant mortality, child malnutrition, life expectancy, and literacy rates correlate well with national wealth, which in turn correlates well with energy consumption. Developed industrial nations rank high in national well-being, but on a per capita basis, own a disproportionate share of world wealth, and consume a disproportionate share of the world’s energy. Economic growth correlates well with growth of energy consumption in both rich and poor nations, and conversely, reductions in energy consumption correlate with economic decline. When energy consumption is expressed as a function of GNP instead of a per capita basis, developed nations are more efficient in use of energy than poorer ones.

Fossil fuels furnish 90% of the worlds energy (oil and gas supply 63%), and their use has grown by 14% over the last decade (oil and gas use is up 19%). Long range concerns about depleting resources of fossil fuels, and more immediate concerns about increases in atmospheric carbon dioxide produced by their combustion and the postulated ill effects of global warming, weigh against continued increase in use of fossil fuels and favor alternative energy sources. Examination of alternatives suggests that none, other than possibly nuclear and hydropower, both in environmental and political disfavor, offer hope for supplying more than a fraction of demand. Hence either natural limits on use of fossil fuels set by depleting resources, or artificial limits, in an effort to control carbon dioxide emissions as tentatively agreed to in Kyoto and Buenos Aires, stand in stark contrast to the need for more energy consumption to improve the economic development of all nations and particularly the poorer ones.

This paper explores these relationships, and identifies some of the hard choices which lie ahead, and will inevitably impact the use of oil and gas.

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