June 19–The United States may lead the world in combined oil and gas production, but the growth in energy demand is driven almost entirely by Asia, especially China and India.
A new report from Rice University’sBaker Institute for Public Policy emphasizes the U.S. will play second fiddle to the developing Asian continent when it comes to energy consumption through 2040 and possibly beyond.
While renewable energy sources like wind and solar will continue to rise as rapid rates, the growth will continue to require large volumes of crude oil, natural gas and even coal.
This all means the U.S. should not retreat from multilateral and bilateral free trade policies or wage wide-reaching trade wars because the U.S. could weaken its position as a global energy exporter and, in effect, decrease the demand for U.S. oil and gas, argued Baker Institute academics Anna Mikulska and Michael Maher.
Already, China is threatening to place tariffs on U.S. oil and more as President Donald Trump pushed $50 billion of new tariffs on select Chinese goods starting July 6 in retaliation to alleged intellectual property theft by China. Trump is warning he may escalate that to $200 billion in additional tariffs. China has not yet proposed placing tariffs though on U.S. liquefied natural gas.
Port hubs along the Gulf Coast in Texas and Louisiana are leading most of the growth to export more oil and LNG worldwide. A number of LNG export complexes are currently under construction, including in Freeport and Corpus Christi, while the Houston Ship Channel and Port of Corpus Christi are expanding to ship out much more crude oil produced from West Texas’ booming Permian Basin. There’s currently a race to build out several pipelines across Texas to transport the oil to the Houston and Corpus hubs.
China and India will account for between 65 percent and 75 percent of the growth in global energy demand through 2040, the report notes. Much of the remaining growth will come from smaller Southeast Asian nations. The region will need more than 400 million metric tons of of additional oil equivalent demand through 2040, which is about half of China’s total current demand.
The Rice report drew information from the U.S. Energy Department, the International Energy Agency and British energy major BP’s annual energy outlook.
The report also warned that energy must be produced as sustainably as possible with fewer emissions and more reliance on renewable sources in order to meet global goals to combat climate change while still feeding the growth of the developing world.
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