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The Allure of Graphic Predictions

We’re not ones to trust any kind of research associated with a massive energy conglomerate (Ever read the Exxon funded Idso research? It would be hilarious…. if people didn’t cite it seriously). They’ve got good reason to skew the information in their favor (stock prices, government investment in their projects, etc.), but what can we say? We’re suckers for pretty graphs. And this 30-year prognostication has lots of ’em.

Essentially, Exxon is attempting to envision what the world is going to look like by the time we get to 2040. They leave visions of jet packs and hover boards to the sci-fi fans out there, and instead focus on how economic growth trajectories will impact a variety of markets. Because they’re dealing in energy markets, the largest implications are those associated with crude oil, natural gas and others.

We’re more of the technical sort who will react to price moves as they happen instead of where prices will go based off of these long term outlooks, but some of the stats in the piece are mind blowing… for example:

  • As you’re reading this on your electronic mobile device, consider 1.3 Billion people don’t have access to electricity
  • Just 100 years ago (about 1910) we still got about 40% of our global energy from burning wood. A lot can change in 100 years
  • 75% of the world’s population will live in Asia/Pacific and India by 2040
  • The world will save about 500 quadrillion BTUs over the next 30 years in improving energy efficiency (we just wanted to use the word quadrillion)
  • The number of cars & trucks in the world will double to 1.6 Billion in 2040 (not including commercial vehicles)
  • Natural Gas will become the #2 fuel source by 2040, with more use in nearly everything from transportation and electricity to chemical production
  • China’s industrial demand will decline about 20% by 2040 (Decline? Yes)
  • Natural Gas emits up to 60% less CO2 than coal when used for electricity generation
  • Based on current demand, the world has 200 years of Natural Gas supplies

Generally speaking, though, Exxon is bullish on global growth. However, one other chart out today might be equally worth your consideration (even if not so pretty). At the NYT Dealbreaker conference, economist Robert Gordon presented his case for why we’re headed for a period of sharply contracting GDP around the world. As a Business Insider article explains, Gordon takes a look at three separate economic boom periods, which he describes as, “IR #1 (steam, railroads) from 1750 to 1830; IR #2 (electricity,  internal combustion engine, running water, indoor toilets, communications, entertainment, chemicals, petroleum) from 1870 to 1900; and IR #3 (computers, the web, mobile phones) from 1960 to present.” His analysis concludes that the latest IR period has been tremendously weak, that the implications of the second IR period would be next to impossible to duplicate, and that, essentially, Exxon’s projections are the stuff of fairy tales.

Who will be correct? Only time will tell.