Oil & Gas Markets and Climate Change Policy

Workshop on
Oil & Gas Markets and
Climate Change Policy

August 9-10, 2001 - Snowmass, Colorado

On August 9 and 10, 2001, The Pew Center hosted a workshop in conjunction with the Energy Modeling Forum of Stanford University to bring together experts from around the world to discuss the manner in which economic models portray fuel use. Determining future supply and demand of natural gas (NG) is important in determining climate policies since natural gas is a relatively cleaner fuel – in terms of carbon emissions – than are coal and oil. A climate policy based on reducing the carbon content in fuels would presumably favor gas, along with other less carbon-intensive energy sources, thus accelerating its demand.

But economic models that examine the climate change issue show mixed results on this score: many models show the demand for gas increasing relative to more carbon-intensive fuels while others show its demand decreasing at a rate faster than oil (which is explained by gas demand being more responsive to a tax). Without clear information on the true path of natural gas, policy-makers will not be fully informed on how to address the climate change problem. The modelers took first steps towards investigating this problem by determining common definitions for various oil and gas categories and expect to be able to compare results of their various models regarding oil and gas consumption early next year.

Other topics discussed in this workshop included the anticipated supply of various fuels, primarily oil and gas, and the factors that determine the ultimate level of global reserves, the potential for developing a world market in natural gas through liquefaction, and advances in technology which influence the cost of production of oil and gas.