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Future growth in oil demand may be significantly constrained in the coming decades by emerging policies in the United States and elsewhere to address climate change, according to research presented by Rice University’s Baker Institute today at a roundtable held in Abu Dhabi. The research also highlighted how those same policies might open up new markets for natural gas, which is considered a cleaner, more climate friendly fuel. The event, supported by consulting and technology services company, Accenture, and legal services company, Baker Botts, discussed how decision makers in the Middle East can respond to the changes in fossil fuel demand and carbon emissions policies. The roundtable was attended by senior energy leaders from around the region as well as financial, banking and business executives.
The industry gathering included keynote speeches from His Excellency Mohamed Bin Dhaen Al-Hamli, Minister of Energy in the United Arab Emirates, His Excellency Ghanem Al-Jumaily, Ph.D., Ambassador of Iraq to Saudi Arabia and The Honorable James A. Baker, III, former US Secretary of State and honorary chairman of the Baker Institute.
In keynote remarks opening the gathering, Secretary Baker noted that "Oil and natural gas will be important commodities of world economic importance for generations to come, even as the United States, the EU and China experiment with alternatives energy sources." In explaining the context of U.S. initiatives to "look to energy efficiency and alternative energy to prevent an unfettered growth in oil demand that is impossible to meet" Baker added: "As the United Arab Emirates, Saudi Arabia and Qatar have shown with new programs in science and technology, prosperity lies in embracing a wide range of opportunities to work together to ameliorate the oil boom and bust cycle in the short run while considering a sensible transition for the very distant post-oil era that can be developed in a manner that preserves economic prosperity for the Gulf." Other speakers also emphasized the changing outlook for global oil and natural gas markets.
"The evolution of low carbon technologies will happen faster than many conventional forecasts predict, so the question is whether policy makers in the US and the Middle East can react as fast as technology development," said Arthur Hanna, Managing Director, Oil and Energy, at Accenture. "And although much US policy has global influence, we live in a multi-polar world where, for instance, China’s commitment to Carbon Capture and Storage (CCS) or energy efficiency could have as great an impact on the Middle East’s energy industry as changes in North America." Kenneth Medlock, a research fellow from the Baker Institute, discussed with delegates how rising production of natural gas from shale in the United States was likely to limit opportunities to sell liquefied natural gas (LNG) to North America, even as emerging carbon policies increase demand for natural gas in North America and Europe.
Professors Mahmoud El-Gamal and Amy Myers Jaffe presented findings from their new book, Oil, Dollars, Debt and Crises: The Global Curse of Black Gold, which argues that the United States and other major economies have not taken adequate measures to address the underlying forces driving the 2007-2008 financial and oil crises. "Only by addressing long-term energy policy challenges in the West, meeting economic development challenges in the Middle East and adopting proper regulation of banking, financial and commodity markets can policy makers ameliorate the forces that will continue to cause repeating global economic crises," Jaffe said.
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