As predicted before, new evidence about energy production and consumption provides considerable insight into the development of market strategies.  The new report shows dramatic growth in the available supply of oil from the U.S. The 62^nd annual BP Statistical Review of World Energy reported that the U.S. was among the larger global producers of oil.  The U.S. led in growth of oil production with a 14% growth rate, year over year.  Saudi Arabia, still a world leader in oil production, grew at a 4% rate by comparison while U.S. production now represents about three-quarters of Saudi Arabia’s daily production.

The growth in U.S. production of oil is something that Penley on Education and Energy has previously noted as a likely outcome of technological improvements associated with oil extraction and the development of shale beds. Interestingly though the real news in the BP report is the increasing use of non-oil energy sources and the worldwide shift in demand for oil, once again signaling that that emerging markets will increasingly play an even greater role in the world market.  Bob Dudley, Executive for the BP Group and Thunderbird School of Global Management alumnus said:

For those of us in the energy industry, the challenges are about how we respond to the big shifts we are seeing – a shift in demand towards emerging economies and a shift in supply towards a greater diversity of energy sources, including unconventionals.

In developed countries like the U.S., oil consumption declined by 3%, despite the dramatic, forecasted increase in production.  The shift in increased consumption in emerging markets was evident once again in this data.   Although consumption increased by 5% in China, this was not record-setting for its rapidly growing economy.  Far more significant is the signal for growth in developing markets such as Africa where consumption was up 5% and in the Middle East were increases rose by 4.5%.

Differential changes to regional oil consumption continue to signal the global shift in economic opportunity from North America and Western Europe to regions of the world represented by emerging market economies such as Africa, Asia and Latin America. This serves as a reminder to businesses from all sectors, including education, that the prospects for the future lie in these emerging markets..

The BP Report also, as Mr. Dudley observed, a greater diversity in sources of energy and the continued potential that exists in non-traditional sources of energy for changes to labor markets and business opportunities.  Consumption of energy from renewable sources grew by double digits in many parts of the world, including developing countries.  In the U.S. and Europe (including Eurasia), consumption of renewable energy rose year-over-year by 12% and 15% respectively.  In emerging market regions like Latin America, the growth rate of consumption of renewables was even stronger at 20%.  Israel’s growth rate was a staggering 46%. Still accounting for just less than 5% of total energy consumption worldwide, renewables managed to reach a new record at this level.

Further evidence of the shift to more diverse sources of energy was the 2% increase in the production of natural gas.  The U.S. led the way in total volume change, but production grew in every global region except for Europe.   A surprising element of the data was the finding that trade in liquefied natural gas (LNG) declined.  This could have been the case for several reasons.  One possibility is the global growth in use of the new technologies associated with fracking, limiting the need for imports from other regions of the world.  A second possible reason is continued restrictions by some governments such as our own here in the U.S. on export permits of LNG.  A third is the simple matter of the increased costs associated with transportation.  The Center for Energy Economics at the University of Texas estimated that, at the low end, cost of terminals, liquefaction and transportation from Louisiana to Malaysia, for example, added $1.68 per million BTu.

The BP Report shows us that there is considerable change in the production and consumption of energy across the world..  Its implications are significant for our understanding of global economic development and for understanding the foundation for the development of global market strategies.  These changes also help to signal where labor markets are headed and offer insight to those of us in education about the likely areas where job growth will grow and ebb.  The study of energy consumption and reports like these show us not only where energy is going and how it’s moving but also where the next great opportunities lie.