World energy demand is predicted to grow over the next 25 years. A U.S. government report indicates high oil prices will encourage consumption of alternative fuels.
The world's appetite for energy is expected to increase 71 percent over the next quarter century, with the biggest growth coming in developing countries in Asia and Latin America. The U.S. Energy Department predicts oil will remain the dominant source, but suggests high prices could lessen its market share. Energy Department administrator Guy Caruso says oil accounts for 38 percent of the world's energy consumption, but may drop to 33 percent by 2030.
Caruso said, "The main beneficiaries, if you will, of oil's reduction in market share are coal and natural gas. Most of that growth will be in developing countries."
High oil prices could also have a beneficial effect on alternative fuels. Caruso said production capacity for unconventional liquids will increase from just under two million barrels to more than 11 million barrels per day. "Unconventional liquids are the oil sands, particularly in Canada, heavy oils, particularly in Venezuela, as well as bio-fuels, that we're hearing so much about, whether it be ethanol, or bio-diesel, coal to liquids, and gas to liquids,” Caruso said. “All will be stimulated by these higher prices should they continue to be as high as we project them."
Some experts say oil prices could surge in the event of a military conflict in oil-rich Iran. Saudi Ambassador Prince Turki al-Faisal warns oil prices could triple if diplomatic efforts to curb Iran's nuclear ambitions fail. "Just the conflict itself, the idea of somebody firing a missile at an installation somewhere will shoot up the price of oil astronomically," he said.
The U.S. Energy Department says the era of cheap oil is over, and the report predicts world oil consumption will increase by 33 million barrels per day -- by 2030.