Future World Oil Prices and the Potential for New Transportation Fuels

Abstract

World petroleum demand is projected to continue increasing after the world enters the 21st century. The Energy Information Administration (EIA) forecasts low world oil prices for the indefinite future despite an expected 54 percent rise in consumption by the year 2020. In its reference case, EIA also assumes an 80 percent increase in Organization of the Petroleum Exporting Countries (OPEC) oil production over the same time period. In contrast to this, a popular world oil market projection model demonstrates that OPEC could increase its production profitability significantly by substantially slowing the rate of its expanded production. However, OPEC’s potential market control also is influenced by the prospective availability of fuels produced from natural gas, especially remote unconventional natural gas resources. The unconventional natural gas resource is potentially enormous compared with all other fossil fuels combined. Considerations of energy security, greenhouse gas curtailment, emissions control, and cost will act to dictate widespread production and use of these unconventional reserves. Estimates are provided for the amount of alternatives that might be available at various oil prices. Because of cost considerations, much of this added production is likely to occur outside the United States.