The Outlook for Energy

Exxon Mobil publishes a long term energy outlook (The Outlook for Energy: A View to 2040) which they update annually. It’s full of interesting facts and charts on energy use and is well worth reading. Integrated energy companies like Exxon Mobil commit capital to projects whose payoff can take decades, and so they are inevitably in the long term forecasting business. The Outlook for Energy provides a perspective on their thinking as well as an interesting snapshot of likely shifts in energy consumption.

Globally, the number of middle-class households (defined as having discretionary income to spend beyond basic necessities) is the most important input into the demand side. Although demographers forecast global population to rise by 2 billion to 9 billion by 2040, more significant for energy demand will be the more than doubling of members of middle class households in just fifteen years, from 1.9 billion to 4.7 billion by 2030 (according to the Brookings Institution). In spite of this, The Outlook for Energy anticipates substantially slower rate of actual energy demand as energy intensity (the amount of energy required to produce a fixed amount of GDP) improves in the developing world to reach present day levels in the U.S.

Half of the increase in energy demand from Transportation will occur in China and India, as a result of which heavy-duty use (trucks) will substantially outpace light-duty (mainly private automobiles). In spite of an expected near doubling in the number of cars of the roads, substantial improvements in energy efficiency will result in little overall change in energy demand from this sector.

As a result of increased efforts to control pollution, CO2 emissions are expected to eventually flatten out and then begin declining over the next 10-15 years. Given the uneven nature of such initiatives globally, this must be one of the more speculative forecasts.

The most significant change in long term supply in recent years is most assuredly the development of “tight”, unconventional oil and natural gas liquids (NGLs) in North America. In just a few years unconventional gas production in North America is likely to exceed the total from the Middle East, turning the U.S. into a significant net exporter within ten years. Although coal will continue to be a substantial source of electricity supply through coal-burning power stations, it has been falling as a percentage of fossil fuels used for many years. In fact, recently Beijing announced it would be closing its last coal-fired power plant by the end of 2016.

Overall, The Outlook for Energy provides a useful global, long term perspective and highlights America’s place evolving role as a producer.


Print Friendly, PDF & Email

Important Disclosures

The information provided is for informational purposes only and investors should determine for themselves whether a particular service, security or product is suitable for their investment needs. The information contained herein is not complete, may not be current, is subject to change, and is subject to, and qualified in its entirety by, the more complete disclosures, risk factors and other terms that are contained in the disclosure, prospectus, and offering. Certain information herein has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. No representation is made with respect to the accuracy,  completeness or timeliness of this information. Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments.  Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

References to indexes and benchmarks are hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in an index and do not reflect the deduction of the advisor’s fees or other trading expenses. There can be no assurance that current investments will be profitable. Actual realized returns will depend on, among other factors, the value of assets and market conditions at the time of disposition, any related transaction costs, and the timing of the purchase. Indexes and benchmarks may not directly correlate or only partially relate to portfolios managed by SL Advisors as they have different underlying investments and may use different strategies or have different objectives than portfolios managed by SL Advisors (e.g. The Alerian index is a group MLP securities in the oil and gas industries. Portfolios may not include the same investments that are included in the Alerian Index. The S & P Index does not directly relate to investment strategies managed by SL Advisers.)

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involves a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of SL Advisors LLC or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made. r

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with SL Advisors LLC with respect to any linked site or its sponsor, unless expressly stated by SL Advisors LLC. Any such information, products or sites have not necessarily been reviewed by SL Advisors LLC and are provided or maintained by third parties over whom SL Advisors LLC exercise no control. SL Advisors LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

Past performance of the American Energy Independence Index is not indicative of future returns.

Print Friendly, PDF & Email
0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.