Energy Investment: Today’s Delays are Tomorrow’s Disasters

Posted on 11. Feb, 2009 by Ross in Energy News, Oil

As the global downturn continues, demand for energy has dropped as manufacturers reduce production or go under. Talking to energy executives in Houston this week though, BP Chief Executive Tony Hayward warned of the dangers of complacency in failing to invest despite the recession.

In response to turbulent oil prices, OPEC has recently embarked on significant production cuts in an effort to stabilise the market and re-inflate the value of crude oil. Historically however, such measures have been accompanied by a concurrent lack of investment into new energy resources, leading to shortfalls and sluggish responses to increases in demand once economies pick up again. The current crisis is in this context a blip in the continual exponential growth in the worldwide economy.

Over the next four decades the global population is expected to rise to 9 billion, along with a massive growth in living standards and expectations. The next ten years alone (recession included) are expected to see a 40% increase in energy demands as an extra 500 million incomes rise above $5,000, primarily in the emerging economic superpowers of India and China. The demand will be there, but what about the capacity.

The largest energy companies are for now committing to maintaining capital spending plans, but medium-sized producers are already trimming expenditure and small and independent companies have all but abandoned their investing. Don’t expect to see new technologies plugging resulting shortfalls or increasing efficiencies either: the US dog food industry spends more on research and development than the US energy industry. As a result of exploding demand and neglected supplies, oil and energy prices are set to dramatically rise over the next few years, leaving businesses with little option but to resort to their own energy efficiency measures.

Somar International Ltd is a dynamic market-led company providing proven energy efficiency solutions to businesses worldwide.