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Oil demand could soon outstrip supply

Oil refinery

TEXT OF INTERVIEW

Scott Jagow: In Davos, Switzerland, they're wrapping up the World Economic forum. Today, the head of Royal Dutch Shell met with Nigeria's president to talk about security and oil. Shell's CEO is Jeroen Van der Veer. He told his employees something this week that might surprise you: World demand for oil and gas will outstrip supply within seven years.

Our European correspondent, Stephen Beard, joins us now. Seven years? That's a lot sooner than we've heard before, isn't it?

Stephen Beard: Absolutely. And this is interesting because historically, oil company bosses have not been in the business of saying, "Our principal product is going to run out in a few years, so you better start thinking about alternatives." But increasingly, that's precisely what they are saying.

Jagow: So what is he say are the repercussions of that?

Beard: Well, he says we simply have to develop other sources of energy. And he says however much investment goes into renewables, the world is going have to develop more nuclear power. And it's also going to have to spend a lot more money getting out fossil fuels that are pretty inaccessible, such as the Canadian tar sands and the oil and gas reserves up in the arctic.

Jagow: Does he suggest that Shell is going to get into these businesses?

Beard: No. What he says, he's being more broad-brushed than that. He says there are two possible scenarios. One he calls "scramble," and the other he calls "blueprints." Under the scramble scenario, governments go hell-for-leather, flat out try to lay their hands on whatever energy they can get hold of, such as domestic coal -- which obviously is not such good news on the global warming front. Under the blueprints scenario, he says, governments are far more measured, and they try to husband our energy resources more carefully. He doesn't say which of these two scenarios is likely to materialize. It depends, I suppose, on whether you're an optimist or a pessimist -- whether you think the gas tank is half full or half empty.

Jagow: Haha. All right, Stephen Beard, our European correspondent. Thank you.

Beard: OK, Scott.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.
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