As developing countries industrialize and rich countries continue to devour power, global energy demand is projected to increase 60% in the next 25-30 years, according to the International Energy Agency (IEA). Fossil fuels will continue to dominate, estimated to account for 85% of future demand. Even if the Saudi Kingdom pumps to full capacity, currently rated at 15 million barrels per day, it is anticipated that oil markets will face continuing high demand, which is to say that the Excess Demand for Oil (EDO) characterizing world oil markets since 1973, will continue to grow. Assuming current rates of consumption, U.S. reserves are forecast to last only another nine years, as domestic production in the U.S. continues a decades-long decline.
This paper, which forms part of a comprehensive study to develop economic models based on futuristic energy pricing policies, increasing globalization and better understanding of environmental impacts, analyzes oil prices over the last two decades as a basis for discussing four principal scenarios for predicting a general oil-price trend for the coming two decades. Concluding that a major supply-alleviating breakthrough from some other non-fossil-fuel alternative is unlikely, it therefore rules out the "Optimistic Model" scenario of a long-term steady-state for oil prices. After carefully considering the exploration efforts to increase the international reserves through new discoveries on the one hand, and the different implemented techniques of improved oil recovery (IOR) for maximizing production from discovered reservoirs on the other, it concludes instead that any of the other three models (two of them categorized as "Realistic") could emerge sometime in the next 3-5 years as the trend-setter.