Barry Glassman, CFP

Barry Glassman, CFP®

His vision for starting GWS was to deliver investment strategies and wealth management services typically available at the highest levels of wealth. Today, clients benefit from these sophisticated financial services targeted to meet their unique needs.

Last week, the International Energy Agency (IEA) released its 2011 world energy outlook. The IEA painted a dire picture for the global energy outlook, showing an increasingly stressed oil market where production is simply unable to match growing demand from emerging economies.

Among the key findings, the IEA projected that global energy demand will increase by one-third between 2010 and 2035, with oil demand, in particular, rising from 87 million barrels per day (mb/d) to 99 mb/d during that timeframe. Unsurprisingly, the two biggest drivers of demand growth will be China and India, which the IEA expects will account for 50% of demand growth.

Demand growth is generally a good thing, as it means goods and services are in need. In the case of crude oil, however, production is struggling to keep pace. Crude oil supply is expected to grow marginally in the next 25 years before beginning a steady decline. Even more problematic, production capacity of 47 mb/d is needed during that time to offset reduced production in existing fields.

Without an alternative to crude oil, nations around the globe run the risk of becoming ever more dependent on volatile regions such as the Middle East and North Africa.

Not only is oil becoming scarcer, but the cost of production is set to rise quickly in regions like Latin America, where extraction techniques are becoming more intricate. All of these factors will influence oil prices and consumer behavior in the coming decades.

Yet, humans are nothing if not innovative in their time of greatest need. In recent years, an abundance of natural gas has been located in various regions of the world, including right here in the US. This led the IEA to go as far as dubbing this the “Golden Age of Gas.”

The shift to a world of natural gas will not be easy. In order for natural gas to fulfill its potential, the IEA estimates that $9.5 trillion of infrastructure investment will be necessary over the next 25 years. That is a staggering sum in any environment, much less one where global governments are implementing harsh austerity measures and slashing spending.

Lost in all the discussion about sovereign crises in Europe and “super committees” in the US is the simple fact that emerging economies continue to expand rapidly. A burgeoning middle class in emerging economies is demanding modern amenities and lifestyles that offer distinct challenges to what are everyday staples in developed countries. Crude oil demand is a perfect example and one that requires serious policy actions if we are to avoid another crisis in the not so distant future.

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