The most precious commodity in the world is energy. Most energy comes from fossil fuels like crude oil and coal. When you take inflation into consideration and calculate the real price of oil, today’s brent crude oil price should be well over $140 a barrel.

Estimating proven reserves in the ground is an art that even oil majors have not mastered. In 2004, Royal Dutch Shell had to revise its reserves by 20% downwards. Great Britain has been an oil exporter for the last 25 years and now the country has become an oil importer again because supplies from the North Sea are dwindling. Indonesia, a former OPEC (Organization of the Petroleum Exporting Countries) member, is also importing oil again and Mexico has the same problem. On the demand side, China is the second largest oil importer in the world today, although most Chinese do not yet have a car. Many Chinese do not even have electricity. When the per capita oil consumption in China rises to the level of Mexico, oil production must increase by 50%. China is the biggest energy consumer in the world and may import a total of 275 million tonnes crude oil in 2012. At the beginning of the new century this import figure was a modest 70 million tonnes.

According to many research reports from international think tanks and oil companies the demand for crude petroleum is forecast to increase by 35-40% by 2030 to around 120 million barrels per day. According to the "Peak Oil” believers, it is estimated that the worldwide conventional oil supply will be depleted within 40-60 years and we are within a few years "before or after” the peak in conven­tional oil reserves.

Most experts project a continuing rise, apart from short-term fluctuations, in the price of oil. They argue that prices of nonrenewable commodities, like crude oil, will rise significantly as the inventory (reserves) of the commodity decrease.

I think we have to deal with several oil scenarios:

1. If the global economy stays subdued in the coming 5 years, I do not believe we will see significant price rises in oil.

2. If the global economy grows steadily in the coming 5 years, I believe oil could move up to $120-140 a barrel.

3. In 5 years time 11 million new barrels of oil from Canada, the United States, and Brazil will come on stream daily, providing an extra supply to the market. Thus, I think in 5 years we will have ample supplies and oil will move down to $50 a barrel.

4. This downward trend will be reinforced by the increased production of second — generation biofuels and biomass coming on stream, replacing oil supplies.

5. Geopolitics play an important role: if for, instance Iran, has developed nuclear weapons and if we face a new war with the Middle East, the oil price can easily double.

Energy use in the transportation sector includes the energy consumed in moving people and goods by road, rail, air, water, and pipeline. The transportation sector is second only to the industrial sector in terms of total end-use energy consumption. Almost 30% of the world’s total delivered energy is used for transportation, most of it in the form of liquid fuels.

The transportation share of world total liquids consumption increases from 53% in 2007 to 61% in 2035 in the US Energy Information Administration (EIA)’s IEO2010 Reference case, accounting for 87% of the total increase in world liquids consumption. Thus, understanding the development of transportation energy use is the most important factor in assessing future trends in the demand for liquid fuels. Figure 1.1 shows that renewables will be the fastest growing energy source.

Another good example is the International Energy Agency (IEA)’s outlook for American electricity generation from renewable sources. In Figure 1.2 we see that the largest share have biomass and wind. All renewable energy sources combined will increase substantially from 140 billion kW/year in 2009 to over 400 billion kW/year in 2035. Also the energy generation from wind and biomass will increase the most and in about the same proportion. According to the IEA’s beliefs the electricity generation from waste, geothermal and solar power will increase a lot less.

1.3