Environmental Engineering Reference
In-Depth Information
a long-term solution. More recently, the IEA has focused on advising members on energy
policy and ways to move away from fossil fuels towards more sustainable energy sources.
Because oil production is dominated by OPEC and the 'majors', the world oil market is
anything but free. OPEC members, who control about 60 per cent of current production,
can manipulate the price of a barrel of oil by increasing or reducing their own production.
It is a crude mechanism, and one that has threatened to backfire on several occasions (high
oil prices provide an incentive for new exploration and for recourse to alternatives), yet
more than fifty years after its creation, OPEC remains the biggest player in the global oil
One of the most significant responses of oil-consuming states to the insecurities of the
market has been to embrace natural gas. Because of the technical and safety challenges
involved in extracting, transporting and using natural gas, it took longer for a gas market
to develop. Initially, gas was a national or regional fuel. Only with the development in the
mid-twentieth century of long-distance pipelines and the technology to produce liquefied
natural gas (LNG) did a global market emerge. The natural gas market is similar to the oil
market. Indeed, many of the same players are involved, as natural gas is generally found in
combination with petroleum. However, the gas market is a lot more stable. This is because
the high costs associated with making and moving LNG have induced the various parties -
countries, oil companies, power utilities and trading houses - to sign long-term contracts.
Furthermore, thanks to increased competition between Middle Eastern and Russian gas
suppliers, and the recent shale gas boom in North America, the global gas supply has both
There has been a lot of talk in recent years about a renaissance of coal, but the truth is
that coal never really went away. It was replaced by oil as a transportation fuel in the early
twentieth century but remained the fuel of choice for electricity generation throughout the
century. If the world coal market is booming today, it is not because of any great change in
the energy mix, but simply because the demand for electricity, particularly driven by China
and India, is growing rapidly. Coal is available in large quantities in most of the industrial
countries, so the market is stable and predictable (Verein der Kohlenimporteure e.V.
2010
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5.2 Free and Not-So-Free Energy Markets
Major disruptions in the energy economy - from a spike in the price of oil to an accident at
a nuclear power plant - send shock waves through the global economy. The energy sector
is unique in this way; no other is as indispensable to all others, and few are as lucrative.
Energy companies are also among the largest and most powerful corporations in the world.
