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Reality Check: Global Energy Demand To Increase By 40%

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Sarah Kent, The Wall Street Journal

Investment of $900 billion a year in upstream oil and gas development is needed by the 2030s to meet projected demand, according to the International Energy Agency.

Global energy demand will dramatically increase over the next 20 years, but turmoil in many key producing regions and the difficulties in formulating the right energy policies mean the world may not be able to respond with adequate supply and meet its climate change goals, the International Energy Agency said Wednesday.

In its annual World Energy Outlook, the Paris-based energy watchdog forecast that global energy demand will increase 37% by 2040. Though global resources are adequate to meet the growth in consumption, significant investment and political action are needed to ensure the resources are developed, the IEA said.

A case in point is the oil market, where booming production from shale projects in the U.S. has helped push oil prices down by over 25% since June. However, “the short-term picture of a well-supplied oil market should not disguise the challenges that lie ahead as reliance grows on a relatively small number of producers,” the IEA said.

Crude production from U.S. shale oil fields is only expected to continue rising until the early 2020s and will eventually start to decline. Replicating shale oil extraction outside of North America is expected to prove difficult and other new sources of oil supply are in expensive, complex and politically fraught locations, the IEA said.

According to the IEA, investment of $900 billion a year in upstream oil and gas development is needed by the 2030s to meet projected demand.

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