One of the most powerful driving forces behind the demand for energy is population. The population since 1970 has doubled to about 7 billion people. Another powerful force is advancement in technology. As BP's report states the demand for energy will only increase by 1.7% a year. This is very low taking into account how much the world is expanding although with more advancement in technologies there is less demand for energy with more efficient machines.
2) Why does the report forecast virtually no increase in energy demand in developed countries? What assumptions are made about growth rates in OECD and non-OECD countries?
The report forecasts that the energy demand will grow about 1.7% a year in developed countries. This is due to continuos advancement in technology. A great example is the European Union, there has been a new law passed since about 2010 that there are only going to be light saving light bulbs sold. This is a great decrease in the demand for energy in all of the EU. Assumptions are made that non OECD countries will as well catch up with the OECD countries with lower energy consummations.
Below the demand for energy per GDP produced in a few countries.
3) What factors would lead to a substitution of sustainable energy sources for fossil fuels? What would detrmine the size of such substitution?
- A shortage of fossile fuels
- Innovation
- Much higher costs of fossile fuels
- New laws bannig fossile fuels
Probably the main reason for these substitutions would be the environmental impact on our environment. People are crazy right now about saving the planet and preventing global warming. As well as scarcity of fuels would effect such substitutions.
4) What is the role of the price elasticity of demand for and supply of oil and the income elasticity of demand for oil in determining oil consumption in different parts of the world?
Often the demand elasticity for energy sources is very non elastic since there is no substation for the energy. Coal power plants do need coal to be run and cars need oil. As well as most of the energy meaning oil and gas are provided by OECD countries which might increase the price. The higher the price the lower the demand will be although not much. People will start making shorter trips and investing in more fuel efficient cars.
5) Why may high energy prices not necessarily mean ‘doom’?
High energy prices do not necessarily mean doom. "As a wake up call they can bring incentive for solution"- The Telegraph. A great example is the U.S. when the prices of oil were very low there the public always bought gas guzzling cars. Although now the when the prices have increased as well in the U.S. the famous American car Hummer was closed down and instead the factory will be producing small cars. High prices set a greater pressure on finding solutions.
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