China and Its Impact on World Energy Consumption Dan Westbrook

Energy Consumption 2004

Energy Consumption vs. World Population 2004 Energy Consumption

$GDP*/BOE * 2004 GDP $PPP

Source: UN and DOE EIA Energy use grows with economic development US Australia Russia Brazil China India S. Korea Mexico Ireland Greece France UK Japan Malaysia energy demand and GDP per capita ( )

Source: UN and DOE EIA Energy use grows with economic development US Australia Russia Brazil China India S. Korea Mexico Ireland Greece France UK Japan Malaysia energy demand and GDP per capita ( ) 4x GDP / 2X Energy

Issues Going Forward Political unrest / security of supply Growth in world economy, especially in India and China (and growth in overall population) Environmental issues – carbon tax? Development of new sources of energy

Thank You

Backup

1.~ 23% of world’s primary energy comes from natural gas, 6% from Hydro, 6% from Nuclear, 28% from Coal, and 36% from oil 1.Oil R/P is ~ 40 (and it has been ~ 40 for the last 10 years, was actually lower prior to that time Gas R/P is ~ 65 (and has been over 60 for the last 20 years) Coal R/P ~ 200 yr 1. Today – production is ~ 82 mmbod spare capacity is few % (1 to 1.5 mmbod) 2. Early 80’s production was ~ 60 mmbod spare capacity was on the order of 25% 3.On a real basis, using CPI as the adjustment, the peak price for oil was in 1979 when it was just Almost $100/bbl 7.Average energy growth is just over 2% per year, average oil growth is just under 2% per year. 8.Main drivers for increase in price of oil: 1.Increased consumption – lower spare capacity 2.Geopolitical issues (Nigeria, Venezuela, Iraq, Iran 3.Hurricanes in Oil as a financial instrument 9.World oil reserves have been increasing as far back as you go. Due to improved exploration and Improved recovery 10.Carbon emissions up 4.8% in 2004, and 2.9% in Oil inventories are actually above average since Jan05 12.Refining capacity: global distillation usage was 86% in 2005, only 700,000 bod capacity added in Nuclear power plants: 4 new in 2005, 2 in Japan, 1 in Korea, 1 in India 14.Wind produced 0.7% of world’s electricity in BUT 30% growth / yr over last 10 years. US got 0.4% of electricity from wind 15.Only about 20 to 25% of the worlds energy is used for transportation, more in developed countries, Less in developing countries 16: Hubbard prediction: somewhere between a few years and 20 (non-open) or 30 years (OPEC) 17: CO2 atmospheric concenrtration was 280 ppm several hundred years ago, now 380 ppm