The world’s energy market outlook: Lessons for Guyana’s coming production and export of oil & gas

The question I respond to in today’s column is: Does the prevailing world energy outlook offer useful policy lessons for Guyana’s benefit, in anticipation of its oil and gas production coming on stream in the early 2020s? The demand/supply appraisal of that market, which was presented in my two previous columns suggests that there may be several. In what follows today and next week, I shall portray the most important of these.

First policy lesson

To begin with, the demand and supply data previously shown, make clear that global economic growth (and development) remains, by far, the most crucial factor governing the world energy outlook. Consequently, estimated global economic growth rates, over the medium and long term, will shape the essential elements of the energy market outlook.

While there are several estimates of medium-term and long-term global economic growth available, those provided in the data sources which I have used thus far for appraising the supply and demand for global energy fall within credible ranges (BP, World Energy Review, (WER) 2015 and OPEC, World Oil Outlook (WOO) 2015). Therefore, in what follows, I continue to rely on these sources.

Table 1 shows that estimated world real GDP growth over the medium term (20142020) is modest, averaging 3.6 per cent. For developing countries, however, it is much higher, averaging 5.1 per cent.

And real GDP growth in the developed (OECD) countries only averages 2.2 per cent. Of special note, while the estimated medium-term growth rates are modest; in all instances they are above the current rates (2014-2016).