Main energy resources in the world come from oil, natural gas and coal. Those have general characteristics that implied to market and political situation, such as uneven distribution, technology consumption, high capital in high risk industries and fluctuating market situation. World political situation could control much this energy resources supply and demand. The world is still recovering from the effects of the 2008-2009 global recessions. As these effects continue to be felt, many unresolved economic issues add to the uncertainty associated with this year’s long-term assessment of world energy markets. The International Monetary Fund (World Energy Outlook 2008, October 2008, p. 43) defines a global recession to be when the world’s annual gross domestic product (GDP)—on a purchasing power parity basis—increases by less than 3.0 percent. According to Oxford Economics, world GDP grew by 2.7 percent in 2008, 1.1 percent in 2009, and 4.9 percent in 2010.
Each energy resources have their own use in the public market. Nowadays, oil consumption is still the highest ones . It is relatively cheaper energy for public consumption compared to renewable resources. The demand is also projected to get higher in 2035 (IEA, 2013). Total consumption will move from China to other Asia countries, especially India. This projected follow countries economic growth. The biggest share for oil use is for transportation and electricity.
The use of natural gas also is projected to be increasing significantly. Investment of natural gas is preferable for countries in which work with carbon efficiency, like Denmark and USA. In addition, it is because of relatively low capital costs and the favorable heat rates for natural gas generation. An outlook for strong growth in reserves and production contributes to the strong competitive position of natural gas among other energy sources. Shale gas revolution in USA also has triggered natural gas investment growth faster than other sources. But it impacts to coal uses in other sectors.
Shale gas revolution and environment issues are some reasons that make coal become second priority uses in energy market. Most of coal is using in electricity and industry supports, like smelting and refinery. But these are limited to certain calories which implied to supply of the coal. All challenges imply to price decreasing of coal. China and India as major target of coal export also started to produce their coal resources that create higher uncertainties to coal market. As other primary energy resources, its consumption also follows economic growth in countries.
Energy resources characteristics and world demand create complex situations for its geopolitics. Relationships among countries are facing conflicts which will be supported by many issues in maldistribution.
Geopolitics plays many roles in energy market. Maldistribution is the impact of how geopolitics works much among countries relationship. This situation is facing by Russia. As study case, Russia could be one of good example. Natural resources assets become medium to get “power” in countries relationship. Russia currently supply gas to Europe by the North Europe Gas Pipeline (NEGP) that connects Vyborg, Russia, to Greifswald, Germany, and consists of two parallel pipelines, with a total capacity of 55 bcm/year and will be nearly 25% gas import in 2015. Its energy market power allows Russia to consolidate political power internally and makes Russia immune to normal external checks on the exercise of power. Russia has refused to ratify the Energy Charter Treaty, which would guarantee transit rights for energy through Russia regardless of the owner and preclude cutting off energy supplies as a political weapon. Russia uses energy as leverage in its negotiations with what it sees as upstart neighbors (Ukraine, Georgia), and it continues to resist Europe’s entreaties for comparable rights for its investors in Russia. This typical situation is also constructing in mineral resources, like Molybdenum and Copper to Mongolia. Russia got power “naturally” from its resources and plays with it to get stable situation for their power. But shale gas revolution becomes one of problems that will be faced by Russia energy market, as Middle East suffered for its market now.
PS: You can get some graphs from the references link to see complete information.
References
BP Statistical
Review of World Energy 2013, http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy-2013.html
OPEC Annual
Statistic Bulletin 2013, http://www.opec.org/library/Annual%20Statistical%20Bulletin/interactive/current/FileZ/Main.htm
World Energy
Issue Monitor 2013, http://www.worldenergy.org/publications/2013/world-energy-issues-monitor-2013
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