The Three Hard Truths

• One: Global demand for energy is accelerating
• Two: “Easy oil” will not keep up with demand
• Three: Using more energy now means more carbon dioxide

One: Global demand for energy is accelerating

A recent report by the National Petroleum Council looked at energy data and projections made by the U.S. Energy Information Administration and the International Energy Agency.

From 1980 to 2000, world energy demand grew at about 1.7 percent per year. Since 2000, that trend has accelerated, driven by development in China and India coupled with continued expansion in developed economies.

The United States, however, still accounts for a quarter of global demand. We use 10,000 gallons – enough to fill a backyard swimming pool – every second of every day, and 20 railcars of coal every minute.

Looking forward and assuming adoption of alternative policies, even the lowest projection shows that energy demand will continue to grow at 1.4 percent, while the highest projection is that demand will grow 2.5 percent. At that rate, demand in 2030 will be more than double what it was in 2000.

Two: “Easy oil” will not keep up with demand

While we do not subscribe to the peak oil theory, the truth is that, particularly outside the Middle East, the readily accessible sources of conventional oil are being depleted.

To tap new resources requires hard choices. In some cases, that means spending more on exploration and development to find and tap ultra-deepwater resources as we are doing in the Gulf of Mexico.

It means technology investments to convert oil sands to useable oil fluids as we are doing in Canada. And it means making the policy decisions necessary to grant access to areas where federal restrictions currently limit exploration and drilling.

Three: Using more energy now means more carbon dioxide

We believe that by 2100, the world will have a radically different energy mix. The challenge is how we get there.

Over the short term, most available energy sources are fossil-fuel-based. No matter where we obtain domestic or imported resources, our growing appetite for energy comes at a cost to the environment in the form of carbon dioxide emissions from both mobile and non-mobile resources.

Without intervention, current government projections show that U.S. greenhouse gas emissions will rise 35 percent by 2030. Around the world the rise will be as great, if not greater.

Any path forward needs to include greenhouse gas management as part of the equation – thus the Shell position to support a comprehensive cap-and-trade policy led by government.