Page 18 - Driving Force for Energy Demand
P. 18
ving Forces for Energy Demand 2010
3-1 shows that the correlation between end user price and the international oil
price is highly variable across both the developed and developing worlds. It is
close to 1 in the US where increases in oil price are likely to quickly flow through
to the gas pump. As a result of the difference in correlation between the
international oil price and the end user energy price the relationship between
energy demand, growth and prices in developing countries can be fundamentally
different from that in OECD countries (Benthem & Romani, 2009). It is also
important to note that it has been shown that demand is far more responsive to
income than to price (National Petroleum Council: Raymond, 2007). This is
important because it shows that the effects on developing economies that
depend on growing energy usage to feed economic growth are more negatively
affected by high prices than the developed world. It also shows that the energy
prices in the developed world have to be significantly higher than in the
developing world for demand to change, which may have an impact on economic
growth. Such differences are important for energy policy makers to take into
account when trying to set up policies that will support a safe, reliable and
affordable energy supply even as populations and economies grow pushing
demand higher, to support improved living standards quality of life for both the
developed and developing worlds
3.1 Climate Change is Real
Satisfying the energy needs of a growing population in the developing regions of
the world in an environmentally friendly manner is a key challenge for achieving
a global energy supply that is sustainable versus a climate change scenario
(Krewitt, et al., 2008). Energy demand growth is unavoidable as economies
growth and living standards improves in developing nations. However, if the
increased demand is met through increased use of fossil fuels, in a context where
the global climate is changing as a result of carbon emission, it is likely that the
same developing nations will experience negative consequences such as drought
and extreme weather as a result of climate change. To avoid such a scenario,
energy demand growth has to be met through the use of cleaner technologies
seen in existing and new technical solutions, more efficient use of energy and
behavioural change in large parts of the world. Page 18
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose.
3-1 shows that the correlation between end user price and the international oil
price is highly variable across both the developed and developing worlds. It is
close to 1 in the US where increases in oil price are likely to quickly flow through
to the gas pump. As a result of the difference in correlation between the
international oil price and the end user energy price the relationship between
energy demand, growth and prices in developing countries can be fundamentally
different from that in OECD countries (Benthem & Romani, 2009). It is also
important to note that it has been shown that demand is far more responsive to
income than to price (National Petroleum Council: Raymond, 2007). This is
important because it shows that the effects on developing economies that
depend on growing energy usage to feed economic growth are more negatively
affected by high prices than the developed world. It also shows that the energy
prices in the developed world have to be significantly higher than in the
developing world for demand to change, which may have an impact on economic
growth. Such differences are important for energy policy makers to take into
account when trying to set up policies that will support a safe, reliable and
affordable energy supply even as populations and economies grow pushing
demand higher, to support improved living standards quality of life for both the
developed and developing worlds
3.1 Climate Change is Real
Satisfying the energy needs of a growing population in the developing regions of
the world in an environmentally friendly manner is a key challenge for achieving
a global energy supply that is sustainable versus a climate change scenario
(Krewitt, et al., 2008). Energy demand growth is unavoidable as economies
growth and living standards improves in developing nations. However, if the
increased demand is met through increased use of fossil fuels, in a context where
the global climate is changing as a result of carbon emission, it is likely that the
same developing nations will experience negative consequences such as drought
and extreme weather as a result of climate change. To avoid such a scenario,
energy demand growth has to be met through the use of cleaner technologies
seen in existing and new technical solutions, more efficient use of energy and
behavioural change in large parts of the world. Page 18
Posted by Etree Project Consultants Pvt Ltd only for knowledge sharing purpose.
