Reprinted with permission from McKinsey Quarterly
The Pulitzer Prize–winning author and global energy expert sees rising demand from the East spurring innovation.
The recent rise of emerging markets as voracious consumers of energy has established a price point for oil at more than $100 a barrel, injected volatility into energy markets, and changed the economics of massive, complex energy projects such as oil sands, “tight oil” trapped in shale formations, and offshore drilling. Daniel Yergin, chairman of the energy research consultancy IHS Cambridge Energy Research Associates (IHS CERA), sees the tilt in demand from West to East continuing to reshape the global energy landscape. By 2030, he says, the world will be using a lot more energy than it does today, but the mix will still be dominated by oil, natural gas, and coal. In this video interview, Yergin explains how in the years ahead higher oil prices will produce “a great bubbling of innovation” across the energy spectrum, and shares his perspectives on three geopolitical trends that he sees influencing this transformation. McKinsey Publishing’s Rik Kirkland conducted the interview at the World Economic Forum, in Davos, in January 2012. Yergin is the author of The Quest: Energy, Security, and the Remaking of the Modern World (Penguin, September 2011).