This Is Where This Year's Energy Trends Are Leading Us

This Is Where This Year’s Energy Trends Are Leading Us

by | published November 22nd, 2019

Paris is signaling that winter is coming.

While it has been sunny since we arrived, the air is also getting nippy with that coolness indicating that a more extended decline is coming. Here, it usually begins in early December and lasts through early March.

Still Paris, even when it turns cold, is endearing.

One of my more difficult choices years ago was to turn down a posting to the International Energy Agency (IEA). The agency was established in 1973, following an oil boycott by Arab OPEC countries during hostilities in the Middles East.

The boycott led to long lines at U.S. pumps, and a decision by the Organization for Economic Cooperation and Development (OECD) to create the International Energy Agency (IEA), located here:

IEA Headquarters, 9 Rue de la Fédération, Paris

The IEA analyzes, and issues reports on, all elements of the energy sector and has come to represent as objective a global commentator on the sector as there is available worldwide. IEA has no vested interests. That sometimes places the agency at loggerheads with nationalistic agendas, but it is about as free of politics as one can get on these matters.

Which is why my conversations with IEA colleagues this week entered some unexpected territory.

2019 Was the Most Prolific Oil Year in History


This territory surrounds the phrase “contraction enigma” which emerged during our conversations. It follows from the convergence of issues arising from two reports recently released by IEA.

The first involved the rise of renewables in the global energy mix, a matter I discussed here in Oil & Energy Investor last month (Read it right here). The second is this week’s report in which the agency noted the slowest rise in worldwide oil demand in a decade.

Overall, the movement (especially among Western OECD members) to non-fossil fuel energy sources like solar and wind has been underway for a while. In several regions, this is translating into a more expansive access to energy. With the corresponding plateauing of oil demand, this seems to indicate a major transition underway.

Of course, this discussion must recognize an important caveat.

Even with the projected slowdown in the rise, oil demand, will still be going up year-on-year.

In other words, the world will end 2019 using more oil than at any point in history.

The Trends Are Indicating a Troubling Reality


We are dealing with trends here, not in the emergence of a positive game change.

Even with such trends developing, hydrocarbons (oil, natural gas, and coal) will remain the primary global energy sources for at least the next two or three decades, primarily because of the focus of international energy demand moving to Asia.

Rather, the contraction enigma refers to something else, a matter I have declared as both quite disturbing and even dangerous in previous briefings I have given to policy makers and market participants in Europe and Asia.

One of these in particular became a factor in my current meetings here in Paris.

As veteran readers of Oil & Energy Investor know, I have had the privilege of presenting briefings at the Windsor Energy Consultation held annually under a charter from Queen Elizabeth II at Windsor Castle outside London. Each year for the past decade, I have addressed that elite assembly of ambassadors, officials, and energy sector leaders. a Tibetan Monastery to Multimillionaire: “The 7 Stocks I Trade Every Day”

This is a rags to riches story that starts with a dead-broke volunteer in Southeast Asia – and ends with $5 million, countless lives changed, and an additional $2 million surprise. It turns out this all started when he stumbled on an old Japanese book that calls on a rare market anomaly. It appears for one hour a day, Monday through Thursday. THREE incoming trade targets just popped up – and each could hand you a triple-digit windfall

My 2015 briefing advanced the concern that worldwide energy infrastructure development would not be enough to meet even replacement needs over the next twenty years.

I argued that the prospect is looming for broader areas of the world and an increasing aggregate population falling off the grid. These areas will not have access to energy, and could literally be forced to live “in the dark.”

This lack of access primes widening portions of those living in least developed regions to all manner of terrorist movements.

This becomes much more than a question of equity or fairness. It morphs into a concern over the recurrent rise of an ISIS, Al Qaeda, or similar threats. Cutting off entire populations from energy has far more than merely economic consequences.

This attracted the interest of some colleagues in broader circles, including those at the IEA dealing with similar projections. Occasionally when I would have meetings subsequent to that 2015 address, the matter would arise.

As it has again this week.

The Contraction Enigma Means Less Energy to the Less Fortunate


What was added to the mix was a disconcerting addendum – what the IEA is starting to call the contraction enigma.

The contraction enigma refers to the paradox of increased availability of new energy types that do not translate into improving the living standards of the least advantaged. As more energy is apparently provided, its usefulness to the most disadvantaged contracts.

Put simply, the ability of energy advances to address the most acute of human needs has become questionable. For example, throughout the least advantaged areas of the world, the single biggest problem is polluted water, which cannot be cleaned up without a regular provision of energy. And that is not happening.

With such rising misery, domestic security problems intensify.

Hence, the enigma: Increased energy has been of reduced value to those who need it most.

This is not simply a matter of whether individuals participate in consumer economies. We need to look at this as a matter of human survival.

Even advanced nations in the world are experiencing problems with energy access. Forget about industrial locations in India having sporadic power on any given day; widening numbers of end users in California are now daily cut off from electricity.

Those problems become more immediate and acute elsewhere. The lack of energy access folds into an extended list of shortcomings the “have nots” see as their lot in life. Increasingly, they hold the “haves” responsible.

The backlash has also hit the developed world. Recall the “Take Over Wall Street” movement in New York City or what has been happening here in Paris.

Our hotel is close by the Arc de Triomphe and the head of the fabled Champs-Élysées. Word is the “yellow vest” protestors will be back tomorrow (Saturday) to continue a one-year anniversary of disrupting one of the most famous shopping locations in the world.

They are no longer interested in market participation. Their objects have become to disrupt and destroy.



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