What's fuelling energy?

Increasing demand and limited supply is impacting the energy industry. We discuss the challenges and opportunities of this all-important sector.

Authors: Darren Ripton, Jason Day, Tammy Hall and Laurence Gagen

 

Energy is huge: we rely on it and there are few, if any, substitutes. However, it’s facing increasingly difficult challenges; practical, political and price. But this presents opportunities – for business and investors.

The planet’s natural resources are finite.  ExxonMobil1 predicts we’ll need 35% more energy in 2040 than now. It’s the commanding pendulum of supply and demand. And as we know, the supply side is often under further pressure from the weighted sensitivities of political unrest, as well as exploration becoming less accessible and more complicated, risky and costly.  The companies finding ways to be innovative with fuel or to explore in challenging environments, reuse sites and invent new methods of extraction are the ones succeeding – and presenting sustainable growth opportunities.

Alongside deep sea oil and gas fields, fracked resources, such as shale gas, are beginning to make their mark.  Oil remains the number one source of energy (32%) but gas is rapidly catching up; it’s increased its share of the global energy mix from 15% to 25%2 in the past four decades. The International Energy Agency predicts that natural gas will take the number two spot, from coal, by 20303

We address some of the questions thrown up by short-term market noise to identify the longer-term themes driving the energy sector.

In our latest debate, our investment experts share their thoughts on the trends fuelling the energy sector.

 Sources

1 corporate.exxonmobil.com/en/energy/energy-outlook

2 Source: Citi Research, BP Statistical Review of World Energy as at October 2013

3 corporate.exxonmobil.com/en/energy/energy-outlook

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