Powering the World

It’s too bad we can’t harness the energy of Washington’s Mt. St. Helens. It’s been belching great plumes of steam and ash of late, propelling long buried energy some 10,000 feet into the air. So far it’s been a spectacular show. Geologists say, fortunately, that the current activity won’t be nearly as destructive as the tragic 1980 eruption that killed 57 people and turned the area around the 8,365-foot volcano into a barren wasteland.

Certainly it takes a tremendous amount of pent-up energy to blast through a thick plate of hardened magma and throw debris skyward thousands of feet. And the world is hungry for energy. According to British Petroleum’s Statistical Review of World Energy 2004, “primary energy consumption increased in all regions of the world in 2003. The strongest increase was in Asia Pacific, up 6.3 percent, while North America recorded the weakest growth, at 0.2 percent.” While the United States is still the largest global consumer and importer of oil and gas resources, the BP report noted that China is trying to close the gap and “has now overtaken Japan as the world’s second largest consumer of oil behind the United States.”

In September prices for natural gas hovered in the $5 to $6 per million Btu range–more than twice the amount the commodity commanded just five years ago–and oil prices have been dancing around the record-setting $50 per barrel mark for weeks.

All very well and good, you may say, but what does that mean to me, the independent insurance agent?

For the short term you may see a spike in oil and gas accounts coming your way. U.S. domestic operators, keen to take advantage of rising oil and gas prices, are increasing production in all areas of the country. Workovers, or the redevelopment of previously drilled wells, are the focus of increased domestic activity in the oil market, and both mature and exploratory fields are attractive to natural gas producers.

Long term, who knows? In the forward to the Statistical Review, Lord Browne of Madingley, BP’s Group Chief Executive, wrote that technological advances and an effective global market have “enabled the world to absorb a 25 percent increase in daily oil demand” since 1980.

Technology has also driven an increase in world demand for natural gas. “Technical advances have encouraged gas consumption, as has the desire to move to fuels that emit less carbon,” Lord Browne said. “The Review records last year’s double-digit growth in liquefied natural gas trade, one indicator of the fact that gas is now traded internationally as well as regionally.”

He also noted, “At current levels of consumption there are sufficient reserves to meet oil demand for some 40 years and to meet natural gas demand for well over 60 years.”

I don’t know about 60, but in my experience 40 or 50 years can go by mighty fast.