There is a broad, global focus today on energy as a societal, sociopolitical and strategic resource. In addition, there is a greater focus than ever before on the impact of energy consumption on the environment. Worldwide, investment in the development and implementation of clean, renewable energy technologies and conservation will be a major priority of governments and industry, subject to fluctuations in the economy and the price of crude oil and natural gas. The emphasis will vary widely from nation-to-nation, ranging from cleaner ways to burn the world’s immense stores of coal; to the construction of advanced-technology nuclear generating plants that are exponentially safer than older models (China is leading the way in nuclear implementation); to the use of advanced, more cost-effective renewable technologies based on solar, wind and wave power. BP reports that the world’s electric generation capacity by wind power grew 28.5% in 2007, and by solar the growth was 37%.

The financial crisis of 2008 will put a damper on the growth of energy consumption. Nonetheless, the long term trend is for higher usage, particularly in emerging economies. Mature economies, when they can afford the required investments, will focus on conservation, renewables and cleaner use of fossil fuels. (Over the very long term, nuclear may be an important part of the mix as well.)

Emerging economies will continue to burn a lot of coal and fossil fuels while investing in renewables, nuclear and hydro power. This is where the growth in consumption is essentially unavoidable, in rapidly rising economies such as India and China. Total Chinese energy consumption rose by 7.7% in 2007, while China accounted for over one-half of all the growth in global energy use. In contrast, consumption in the conservation-conscious EU fell by 2.2% in 2007. Overall, global energy consumption rose by 2.4% in 2007, including a relatively modest increase in North America of 1.6%. (These figures are from BP.)

The global energy numbers:
Oil: According to the latest data available from analysts at energy giant BP, the world produced 81.5 million barrels of oil daily during 2007, down 0.2% from the previous year. This includes unconventional petroleum output from such sources as oil shale, oil sands and natural gas liquids. However, it does not include alternative sources such as biomass and coal derivatives. Consumption in 2007 was 85.2 million barrels of oil per day, up from 84.2 in 2006. (The U.S. accounted for 23.9% of global consumption, about equal to consumption for all of Europe at 24.0%. China, including Hong Kong, accounted for 9.4%, while India used 3.3% of global consumption.)

Proven reserves totaled 1,237 trillion barrels at the end of 2007, approximately even with the previous year. OPEC member nations hold 75.5% of those reserves. Including BP’s estimate of Canadian oil sands, at 152.2 billion barrels, increases the total to 1,390.1 trillion.

Natural Gas: Global production of natural gas was 2.94 trillion cubic meters in 2007, up from 2.87 trillion in 2006. Consumption was 2.92 trillion cubic meters, up from 2.83 trillion the previous year. (The U.S. consumed 22.6% of that total. Europe and Eurasia consumed 39.4%.) Proven reserves totaled 177.3 trillion cubic meters: enough to last more than 60 years at today’s consumption rates. (The Russian Federation held 25.2% of those reserves, Iran 15.7% and Saudi Arabia 14.4%. The U.S. held 3.4%.)

Coal: Global production of coal was 3.13 billion tons of oil equivalents in 2007, up substantially from 3.03 billion tons the previous year. Consumption was 3.17 billion tons during 2007, up from 3.04 billion the previous year. The use of coal is continuing to grow sharply, particularly in China, despite the fact that it can be heavily polluting unless the latest clean coal technologies are utilized. China, including Hong Kong, accounted for 41.5% of consumption, and China’s consumption was up nearly 8% over the previous year. India accounted for only 6.5% of global consumption, and its usage was up 6.6% over the previous year. The U.S., where much of electric generation is fired by coal, used 18.1%, and American consumption was up 1.4% over the previous year. Europe and Eurasia used 16.8%, and consumption was up only 0.2% over 2006. Global coal reserves are massive, at 847 billion tons or enough to last for nearly 300 years at today’s consumption rates. The U.S. holds 29.6% of those reserves, Europe and Eurasia 32.1%, China 13.5% and Australia 9.0%.

In the U.S., the Department of Energy estimates oil production was 5.1 million barrels per day from 500,000 wells during 2007. While production in many of America’s largest fields, such as the North Slope in Alaska, is down substantially, investments in offshore production and enhanced recovery in older fields has paid off. Nonetheless, total production is down dramatically from the 1985 peak of 8.9 million barrels of oil per day. (Part of the problem is that Alaskan production peaked in 1988 at 2.0 million barrels daily, and had dropped to 719,000 barrels daily by 2007.) Americans use about 21 million barrels of oil daily, much of it imported.

America’s use of petroleum has led to an increase in annual petroleum imports from 1.24 billion barrels yearly in 1970 to 4.90 billion barrels in 2007.

Meanwhile, only 150 refineries operate in America as of 2008, down by about 50% from 1980. These remaining refineries have invested heavily in additional capacity, but new refineries are needed.

Total American consumption of energy of all types was 101,599,750 billion BTUs in 2007, up from 67,844,181 in 1970. During the same period, energy consumption per dollar of GDP has dropped to 8.78% from 17.99%.

According to the U.S. Department of Energy, electric generation in America as of 2007 used the following ratio of fuels: coal 48.5%; nuclear 19.3%; natural gas 20.6%; and renewable, which includes hydroelectric, wind and solar, at 10%. Most of that “renewable” energy source is hydroelectric, which America has used for decades. These numbers show significant growth in recent years in the percentage of electricity generated using natural gas. Other sources such as solar are growing rapidly, but they clearly have a long way to go to make a significant impact. Fuels for electric generation vary widely around the globe, but coal, oil and natural gas are common sources. In Europe, a large ratio of electricity is generated by nuclear plants, especially in France, and massive investments are being made in European solar and wind generation.

Ever since Colonel Drake drilled the first true oil well in the American state of Pennsylvania in 1859, the ability of oil and natural gas to power electric generation plants, transportation, homes and industry has created both immense economic advances and significant controversy. Many times it has been assumed that the world would quickly run out of oil. In 1939, and again in 1951, the U.S. Department of the Interior warned that all of the Earth’s oil reserves totaled only enough to fuel the world’s nations for about 13 years. In fact, rather than becoming scarcer over time, energy has become much more plentiful. Over much of the history of the energy industry, prices gradually fell lower and lower on an inflation-adjusted basis, while a combination of advancing technologies, determined entrepreneurs and alternative sources exponentially expanded the total amount of energy and global reserves available for consumption.

Estimates of “recoverable” crude (a higher amount than “proven” reserves) on a global basis published by reliable sources in 2006 ranged from 3.74 trillion to 4.82 trillion barrels - enough to take care of the world’s needs for more than 100 years. Estimates of the “total fossil fuel” remaining underground range as high as 14 trillion barrels of oil equivalent, including tar sands and other relatively difficult to produce structures. Technologies will continue to be enhanced, enabling the recovery of significant portions of these resources, as long as the market price of energy is high enough to justify investments in technology, exploration, development and production.

There have long been periods of major fluctuations in price for oil, coal and natural gas. Energy consumers of all types, from residential consumers to transportation firms to industrial plants, have seen oil and gas prices swing wildly, and they have often suffered the economic effects of greatly increased energy costs. Strong global demand for energy combined with political strife in many oil exporting nations could easily lead to a long-term period of relatively high market prices, both for crude oil and natural gas. The price of Arabian light crude oil rose from about $1.85 per barrel in 1972 to about $40 in 1981 during an “energy crisis,” the peak price for many years to come. Adjusted for inflation, that $40 barrel of oil would be $100 or so in 2008 dollars.

More recently, during 1986 and again in 1998, the price of a barrel of oil plummeted to about $10 in a short period of time. However, prices generally rose from 2003 through early 2008. In the fall of 2005, the post-Hurricane Katrina price of a barrel of light U.S. crude oil peaked just shy of $70 as the extent of the damage to production became apparent. The price of natural gas more than doubled from June through October 2005, rising from about $6 to about $13 per million BTUs. In mid-2006, the price of light U.S. crude peaked at about $80. By late 2007, it had neared $100. By mid 2008 it was over $145, but plummeted quickly into the $60s when the global financial crisis of 2008 slowed economies worldwide. Another significant factor in the rising price of a barrel of oil was the value of the U.S. dollar relative to other currencies. They dollar was in a lengthy slide in value, causing the price of oil (which is valued in U.S. dollars on world markets) to rise. As the global financial crisis gained steam in 2008, the value of the U.S. dollar rose sharply and the price of a barrel of oil fell. Of course, the value of the dollar is not the sole factor regulating the price of a barrel of oil, but it is a very important contributing factor.

U.S. consumers have shown a true sea change in their preferences and priorities as a result of higher energy prices, and the era of the gas-guzzling, giant family truck or SUV as a standard is over. Meanwhile, consumers and businesses alike are increasingly willing to invest more in the initial cost of green buildings, high-efficiency appliances and equipment and energy-saving vehicles, with the promise of lower energy costs for daily operation.

Recent high prices for oil and gas put a new emphasis on production from alternative (or “unconventional”) oil sources such as tar sands in Canada and oil shale in the U.S. These fields are significantly more expensive to produce than conventional fields. Meanwhile, offshore exploration and production will continue to be emphasized in many parts of the world, with sophisticated rigs drilling ever deeper to tap massive reservoirs, using technologies that enable the rigs to go to depths undreamed of 20 years ago. Vast new investments in very deep offshore wells in the Gulf of Mexico will bring significant new production to the market over the mid-term, along with deep wells offshore of Africa, Brazil and elsewhere.

Consumers and business organizations alike are suffering from higher energy costs. Many are reacting with new conservation efforts. Toyota’s hybrid-powered automobiles are selling as fast as the company can make them. Massive new solar and wind projects are popping up around the world. (Although, until technologies improve, solar and wind power require government subsidies to be competitive on a cost basis with conventionally-powered generation.) Greatly enhanced building materials and appliances that provide much greater energy efficiency are becoming standard in developed nations. Meanwhile, the growing industrial base and middle class in many parts of the globe, particularly India and China, are putting new strains on energy supplies while energy emissions are creating new environmental concerns.

In 1892, Thomas Alva Edison established the Pearl Street Station in New York City—the world’s first central electric power station. By the 1920s, electricity was in common use in American buildings and homes, and millions of automobiles were clogging American streets. Today, America is the world’s greatest energy consumer. The U.S. accounts for about 24% of the entire world’s petroleum consumption. A significant portion of oil consumption is used as fuel for transportation, including cars, aircraft and trucks. There is no end in sight to the need for power and fuel in developed and emerging economies such as the U.S., the European Union, Japan, India and China. Although the world has made an immense investment in electric supply infrastructure, as much as one-third of the world’s population either has no access to, or cannot afford, a steady supply of electricity.

The U.S. has become much more energy efficient by one measure: In 1970, America required about 1.3 barrels of oil to produce the equivalent of $1,000 in GDP (measured in 2004 dollars). By 2004, the amount of oil required to create the same $1,000 in GDP had dropped to 0.64 barrels—an indicator that energy use has become more efficient in many ways (and American productivity has increased and evolved in general), despite the vast numbers of relatively low-MPG vehicles on the road. Put another way, during about the same period America’s consumption of energy of all types, for each dollar of GDP, has dropped from about 17,000 BTUs to 9,000, a reduction of about 50%.

In terms of BTUs consumed, use by Americans soared from 227 million BTUs per year per capita in 1950 to 331 million BTUs by 1970, but has remained relatively flat ever since. That is, while the number of automobiles and aircraft per capita has grown dramatically; along with vast growth in the percentage of homes and buildings that are air conditioned; combined with tremendous increases in the number of appliances, computers and entertainment devices per person; efficiency has grown to the extent that the energy consumption of an average American (337 million BTUs in 2007) has barely grown over a technology boom encompassing nearly 40 years.

Natural gas consumption has been growing rapidly, and this demand has pushed prices to very high levels. About 20% of U.S. electricity is generated at gas-burning plants as of 2008 (up from 16% in 2006), so the cost of natural gas has hurt electricity consumers in many parts of the nation. At the same time, however, the U.S. sits on immense quantities of coal, nearly 30% of the world’s reserves. America’s 1,300 coal-fired electric plants already create nearly one-half of the nation’s electricity, and technologies that enable coal to be burned in a cleaner manner will be adopted across the nation.

During the 1900s, once Americans developed the habit of guzzling energy both at home and at work, they exported that ethic to the citizens of other developed nations, although consumers outside the U.S. tend to use much less energy per capita. Major cities worldwide rapidly became electrified at the same time that the use of fuel-thirsty automobiles, trains and airplanes caught on around the globe, following the spread of the industrial age. That trend continues today, as booming economies in China and India are creating immense internal increases in the use of oil, coal and gas. Energy demand is soaring worldwide, presenting massive challenges for producers, consumers and regulators while creating major economic and environmental challenges as well.

Meanwhile, as 2008 drew to a close, the global energy industry waited to see what changes U.S. President-Elect Obama would bring to energy policies in America. On the campaign trail, he repeatedly supported massive new investments in renewable energy, windfall profit taxes on oil producers, and a cap and trade system that would regulate carbon emissions. Generally, his campaign emphasized ideas that would be anti-coal, pro-natural gas, pro-renewables, punitive to oil profits at some level and punitive to companies operating facilities (such as coal-fired electric plants) that create carbon emissions. Instigating all of these plans could easily lead to sharp rises in energy costs for American consumers.