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An energy report released by oil and gas giant ExxonMobil offers key points for lithium investors including the implication that the single largest influence on energy trends is expected to be a rising demand for electricity, with forecasted global demand to increase by 80 percent over the next 30 years.
By Dave Brown – Exclusive to Lithium Investing News
Last Thursday top oil producer ExxonMobil (NYSE:XOM) released a new forecast titled The Outlook for Energy: A View to 2040, which projects that global energy demand in 2040 will be about 30 percent higher than it was in 2010. While lithium investors may appreciate the implied bias of an energy report published by a perennial multinational oil and gas giant, the outlook does contain some key points of interest.
The two underlying assumptions of the study are that the global population will continue to grow and relative productivity will double, as measured by global gross domestic product. Energy demand growth is expected to moderate as regional population growth slows, efficiency gains accelerate and economies mature. Total population growth is expected to be led by developing regions including China and India.
Energy trends
The single largest influence on energy trends is expected to be a rising demand for electricity. With ExxonMobil forecasting global demand to increase by 80 percent over the next 30 years, consumers may switch to electricity from other sources including oil, gas, coal or biomass. This could have a tremendous impact on both uranium and lithium industry stakeholders. Economical nuclear energy and efficient storage applications could prove to be effective in guiding policy, technological and infrastructural change and economic development.
The report suggests that although growth in nuclear capacity might slow in the near-term, ExxonMobil expects demand for nuclear power to nearly double over the time frame as countries continue to minimize emissions and diversify energy sources. The projection estimates that as much as 40 percent of global energy production in the world will be taken up by electricity demand.
Transportation industry will pioneer growth and dominate demand
If the methodology for the report and the key assumptions prove to be relatively accurate, the implications for lithium investors and industry stakeholders could yield significant bullish long term results. Although the forecast appears to favour a predisposition for oil interests, the report indicates that within the next 30 years electric vehicles and hybrids will account for nearly 50 percent of light duty vehicles on the road, compared to only about 1 percent today.
An earlier report from Pike Research, released this fall, indicated China should be firmly positioned as the leading market for lithium battery powered electric vehicles in the Asia Pacific region. Globally, ExxonMobil also expects to see growth in electric vehicles and plug-in hybrids, along with compressed natural gas (CNG) and liquefied petroleum gas (LPG) powered vehicles. The ExxonMobil report contains a strong caveat that, by 2030, “on average, hybrid vehicles will cost about $1,500 more than a similar sized conventional vehicle, whereas a CNG vehicle will be nearly $4,000 more, and an electric vehicle will be $12,000 more.” As a result, ExxonMobil’sprojected energy demand related to personal vehicles implies a moderated growth rate for the next 30 years even as the number of personal vehicles in the world is expected to double to approximately 1.6 billion units. The ExxonMobil report forecasts commercial transportation demands will rise by more than 70 percent, driven by economic growth, particularly in developing countries.
Securities Disclosure: I, Dave Brown, hold no direct investment interest in any company mentioned in this article.