Conference Presentation, Fireside Chat, Panel
Power Shifts in Global Energy
Milken InstituteJohn Raymond, Josh Harris, Pierre Breber, Karen Harbert, Bernd Fischer, Amy Christensen
- A tighter supply-demand balance driven by reinvestment shifts and capital expenditure reductions is anticipated to recover oil prices within two years, with a base case targeting break-even economics at $65 to $70, though short-term volatility may keep prices in the $50 to $70 range while half the shale remains uneconomic at $60 and the remainder at $50.
- U.S. oil production is projected to decline by 400,000 to 600,000 barrels per day if prices remain at $50 by year-end, yet maintaining core shale utilization could sustain output at 8 to 8.5 million barrels per day to keep prices in the $60 to $70 range over the long term barring political interventions.
- Long-term global energy demand is forecast to grow by 50% by 2040, driven by a demographic shift of a billion people aspiring to higher living standards and significant demand from developing nations like India, despite uncertainty regarding whether growth will exceed 0.5% of global GDP or 1% to 1.5% due to slowing emerging markets.
- The petrochemical sector is expected to experience massive growth with ethane demand in the Gulf Coast increasing by almost 50% in the past five years, while renewable energy sources like solar and wind are likely to remain in the small single-digit percentage range of the supply stack for five to ten years without subsidies.
- The United States is predicted to become an inevitable crude oil exporter, potentially lifting the ban within two years, which would position the nation as a reliable supplier reducing global volatility, whereas a continuation of the ban combined with production cuts could cause prices to surge and result in severe employment declines reversing previous growth.
- Natural gas is expected to serve as a bridge fuel for 35 years, and while the transition to renewables is slow in developing countries that prioritize reliable low-cost energy, specific markets like Germany and China show distinct trajectories involving coal imports and solar capacity leadership.
- Geopolitical dynamics are expected to shift with the Middle East becoming more critical to China than the U.S., while the current oversupply situation requires a year or two to resolve, heavily contingent on Saudi Arabia's future production strategy.