Shell Oil: Step Change in Energy Use

Shell releases its energy outlook.

We are seeing a step change in energy use. Developing nations, including population giants China and India, are entering their most energy-intensive phase of economic growth as they industrialise, urbanize, build infrastructure, and increase their use of transportation.

"Step change." This is a reference to line graphs in which there is a discontinuous "jump" on the vertical, or "y" axis, rather than a continuous movement up or down. The suggestion is that regardless of whatever rate energy use had been growing, Shell is now seeing a jump to a new base level.

I think that's what folks often forget: the developing nations are entering their most energy-intensive phase of economic growth. And in China's case, they have the money to pay for this growth. As just one minor example, last year, for the first time in its history, GM sold more cars in China than it sold in the United States.

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Some of my recent posts took me back to thoughts of the 1973 OPEC oil embargo. Thirty-seven years later who would have guessed that Alaska production would be slowing, if not outright declining, due to environmental concerns; the promising Gulf of Mexico might suffer the same fate due to environmental concerns; and that a formation in North Dakota would set off a drilling revolution around the world (horizontal drilling and fracking in the Colorado-Wyoming Niobrara; in the Texas Eagle Ford; and, in the French Parisian Basin).