The Energy World is Flat: Opportunities from the End of Peak Oil

Chapter ThreeThe 10 Forces that are Flattening the Energy World

Growth is not a coincidence, it is the result of many forces acting together.

JCPenney

Is the energy world flat?

Today's energy world is not flat. In fact, it is very far from it.

What I mean by “flat” is that the availability and cost of energy around the world varies significantly across regions and commodities. Look at the extraordinary differentials between crude oil and natural gas across North America, Europe, the Middle East, and Asia.

Historically, the availability and cost of natural resources in general, and energy in particular, has been a critical factor in the wealth and poverty of nations both across developed and developing economies. Energy has often been the constraint for the growth and development of countries such as China, where the one-child policy would most certainly not be in place if China had unlimited natural resources.

The debate about the scarcity of natural resources has been discussed at length for centuries, from the days of Thomas Malthus “population grows geometrically, but resources grow linearly”, to more recent theories such as Hubbert's “peak oil”.

There is no scarcity of energy. There is concentration, but no shortage. I remember when I visited Ghawar, the largest oil field in Saudi Arabia. At that time, some industry commentators were questioning decline rate and production capacity, and how they thought it was “technically impossible” for Saudi Arabia to produce more than ...