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ENERGY

Your World vs. America’s View


vs. Washington’s Reality

Karen A. Harbert
Executive Vice President
Institute for 21st Century Energy
US Chamber of Commerce
The New Energy Reality
Energy Security is central to our national and economic
security

 Demand to increase 50% by 2030


 70% in developing world
 Electricity demand to increase
100%
 1.6 billion people without
electricity
 $20 trillion of new investment by
2030 to meet rising demand
 Environmental Sustainability -
over 70% of the current
The New Energy Reality
Energy Security is central to our national and economic
security

 Access to reserves is limited


 2/3 of world’s reserves becoming
inaccessible
 Rising importance of NOCs
 Own 80% of reserves
 Lack of investment in exploration
 Significant rise in project costs
 Resource Nationalism
 Lack of qualified engineers/skilled
labor
Global Challenges
CHINA

 China relies on coal for 70% of their


energy needs, building one coal-fired
plant a week
 By 2025, they could have 300 million
cars on the road, compared to 30
million today
 By 2030, energy-related CO2
emissions from China are projected to
account for 26% of the world total and
48% of total coal-related emissions
worldwide
Global Challenges

INDIA
 Hopes to maintain an annual GDP growth
rate of 8% over the next 25 years.
 That level of growth would require India to at
least triple its primary energy supply and
quintuple its electrical capacity
 India’s demand for oil will grow at an average
rate of 2.9% over the next 25 years, yet they
have only 0.4% of the world’s proven oil
reserves and domestic production is
expected to remain constant or decline
 Oil consumption has increased sixfold over
the past 25 years
Market Situation
Market fundamentals are driving prices up
 Economic growth boosting demand
 OPEC production decisions
 Low OPEC spare capacity
 Moderating non-OPEC production –growth
 Falling inventories
 Refining bottlenecks

 Geopolitical risks
 Increased speculation
 Decline of Dollar leads to investing in
commodities
HIGH PRICES AND VOLATILITY
Market Players
Dependence on imports of liquid fuels and
other petroleum by 2030
million barrels per day
25
History Projections

20
Consumption
Net Imports 54%

15 60%

10 Domestic Supply

0
1960 1970 1980 1990 2000 2010 2020 2030
Annual Energy Outlook 2008
What’s changing?

 Real Economic Impact


 Driving down 4.7%
 Definition of the Problem
 75% are mad
 Who’s to Blame
 Energy is a Priority
 Washington is paralyzed
Where are we headed?

Pew Research Center


What’s our Problem?

Pew Research Center


What is causing my pain?

Pew Research Center


“Has the recent rise in gas and oil prices caused
you or your family any financial hardship, or
not?.”

 70% - June
 75% - July
 63% - September

Los Angeles Times/Bloomberg/CNN


Polls
Who’s to Blame? Not Big Oil
Who’s to Blame?

 The favorability rating of


Congress is at an all time low of
9% (Rasmussen Reports, August
2008)
 All eyes are on the Nov. 4 election
 Change of heart by House
Speaker Nancy Pelosi?
Growing Support for Oil
Exploration
 75% support increased
exploration to reduce our
dependence on foreign oil; 77% of
independents and 66% of
Democrats (July Fox News Poll)
 73% favor more exploration (June
CNN)
 68% (June LA Times)
 67% (June Rasmussen)
We are not running out of resources,
just ACCESS to them
Views on Climate Change
 The public views climate change as a
serious problem but not as a planetary
emergency.
 Public believes energy security more
important than addressing climate
change
 Technology can solve climate change.
 Public not willing to make great personal
sacrifices.
 Public wants a joint cooperative effort
between government, business and the
citizens to solve the challenge.
 U.S. politics are in flux no matter who the
leader is; many different approaches are
being debated in Congress and
throughout federal agencies.
Where should we be going on a new
U.S. Energy Strategy?

 Increase and Diversify Supply


 Increase Suppliers
 Improve Energy Efficiency
 Accelerate Technology
Development and Deployment
 Increase use of alternative and
renewable sources of energy
 Improve Environmental
Stewardship
 Modernize and protect critical
infrastructure
U.S. Energy Strategy-More Realism

 Increase domestic oil and gas


 Recognize role for nuclear and
clean coal
 New alternative transportation
fuels that do not conflict with
rising food demands
 Sustainable policy on
renewables
 Exert authority to get beyond
NOPE syndrome
 Invest in our technology
solutions and our intellectual
foundation for innovation
Road Ahead
 Huge Public Expectations for next
President
 Public is ahead of policymakers
 Growing desire to capitalize on
American resources, create American
jobs
 Energy Policy is a Political Football now
– what will change next year?
 Need better informed debate
 There will be a robust investment in
technology and innovation