Shell flags warning that growth in oil demand will outstrip supply

Shell has warned that by the end of the decade growth in demand for oil will outstrip production and slowing the rate of emissions will become increasingly difficult. 

In its report Signals and Signposts which looked into future energy scenarios and the world’s energy supply, Shell said that over “the next four decades, the world’s energy system will see profound developments”.

Shell has stated that emerging nations like China and India are going through materially intensive development and a tighter market will continue to put pressure on prices and generate volatility.

Additionally, the report cited a step change in energy use. It said that demand pressures will stimulate alternative supply and more efficiency in energy use – but these alone may not be enough to offset growing demand tensions completely.

“Underlying global demand for energy by 2050 could triple from its 2000 level if emerging economies follow historical patterns of development,” the report said. 

The report noted that supply will struggle to keep pace with demand. “By the end of the coming decade, growth in the production of easily accessible oil and gas will not match the projected rate if demand growth,” it said. 

While the report said that alternative energy sources such as biofuels may become a much more significant part of the energy mix, there is no ‘silver bullet’ that will completely resolve supply-demand tensions.

“Smart urban development, sustained policy encouragement and commercial and technological innovation can all result in some demand moderation. But so can price-shocks, knee-jerk policies and frustrated aspirations,” Shell reported.

According to Shell, the global economic crisis has coincided with a shift in geopolitical power from west to east which is transforming the global economic and political system.

“The change is gradual, but is potential consequences are profound. The world faces a period of uncertain global politics. Strategic fault lines are emerging. Rising powers are increasingly and confidently asserting what they see as their national interests. This is undermining global mechanisms for ensuring collective security,” the report said.

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