Published on : Nov 10, 2015
With the industrial base in China needing more and more sources of energy and the United States becoming more energy independent, it is believed that the People’s Republic of China will import five times what the US will by the year 2040 and India will emerge as a major importer as well.
The International Energy Agency’s World Energy Outlook 2015 states that the development of Asia – a region India surpasses China as the leading source of consumption growth – is currently the main demand center for every prime component of the energy mix of the world in 2040. This includes gas, nuclear, coal, oil, and renewables. By the year 2040, the net oil imports of China will be almost five times those of America and the imports made by India will almost certainly surpass those of the European Union.
The growth is likely to have major environmental side effects that will increase problems of air pollution in both the countries that are already reeling with alarming levels of pollution. Major cities in China and India have been listed by the World Health Organizations as having the worst air pollution among the world’s metropolitan cities.
The report by the International Energy Agency has another warning, which is that production of oil will be led by much fewer sources and this will give them unparalleled leverage when it comes to oil prices.
The report reveals that the slump in oil prices has resulted in the momentum of forces that lead to the rebalancing of the market, via lower growth in supply and higher demand. This is possible even though the adjustment mechanism in the oil markets is very rarely smooth. According to a scenario presented in the World Energy Outlook 2015, the tightening of the oil balance could result in prices reaching around US$ 80 per barrel by the end of the decade.