Peter Davies, BP plc .  12 November 2007

Provides an overview of the role of energy economics, initially considering existing oil resources and the theories on peak oil, and highlighting that oil production not only depends on the resources in place and investment, but also a range of other factors: price; technology; taxes; government policies and global levels of demand. Figures for oil prices, market forces and supply curves are provided. For demand, it is evident that the link between GDP and energy consumption remains intact, but that this varies regionally, highlighted through oil s-curves. In respect to climate change, even though the science is widely accepted, emissions show no sign of slowing and issues for dealing with it include the debate between mitigation and abatement versus adaptation, as well as the range of possible instruments that could be used to reduce emissions. Energy security is considered in terms of normal disruption versus catastrophe and through the role of insurance and stockpiles. From an energy economics perspective, it is suggested that: economic forces matter as much as physical and geological factors; cost benefit analysis can help promote rational decision making; energy markets work; and oil prices are impossible to predict accurately.

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