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Tuesday February 15,2011
By Andrew Johnson, Deputy City Editor

OIL prices are set to surge in coming years as supply fails to keep up with burgeoning demand from the booming growth in emerging market economies, Royal Dutch Shell said yesterday.

The oil giant’s warning came as the Brent Crude price hit a 28-month high of $104 on the back of turbulence in the Middle East and rising imports to China.

In a report published yesterday, Shell said demand for energy in 2050 would triple ­compared with levels seen in 2000 while supplies may only grow by 50 per cent.

It said improvements in energy efficiency could cut demand by a fifth. This will leave the world having to work out how to close a gap between ­supply and demand equal to the energy industry’s entire output in the year 2000.

“This gap, this zone of ­uncertainty, will have to be bridged by some combination of extraordinary demand moderation and extraordinary production acceleration,” the company said.

Shell predicted that oil ­production would hit a plateau by the end of this decade but prices would continue to rise before them.

The report said India, China and other developing nations were entering their most energy-intensive phase of growth, putting “pressure on prices and generating volatility”.

While coal was abundant and alternative energy, such as biofuels, would become more significant, it said there was no “silver bullet” that would solve the problem.

“Over the next four decades, the world’s energy system will see profound developments,” added chief executive Peter Voser (right). “Heightened collaboration between civil society and the public and private sectors is vital if we want to address economic, energy and environmental challenges.”

Shell said the financial crisis had accelerated the shift in power from west to east, increasing political uncertainty and the likelihood of price shocks. The company also warned of a growing risk to the environment through carbon emissions.

Among risks to growth, it said, were uncertainty over greenhouse gas emission regulations and the fall-out from BP’s Gulf of Mexico oil spill.

However, there could be growth from huge resources in Iraq and natural gas. The company said it was crucial businesses and governments took the right decisions now. and its sister non-profit websites,,,,,, and are owned by John Donovan. There is also a Wikipedia feature.


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