One thing you can never say about the energy business is that it is boring. It’s always in the news—as the main villain in climate change, in debates over offshore drilling, and in coverage of the yo-yo-like increases and decreases in gas prices.
After a pandemic helped reduce energy use—and oil prices—demand is back. And it is, pardon the pun, fueling energy shortages. For example, natural gas shortages in Europe and Asia are boosting oil demand, making an already large supply deficit in crude oil markets even worse, according to the International Energy Agency (IEA). Note that the price of U.S. WTI crude oil was $84 per barrel on Nov. 1, more than double the $37 per barrel price a year earlier.
“An acute shortage of natural gas, LNG and coal supplies stemming from the gathering global economic recovery has sparked a precipitous run-up in prices for energy supplies and is triggering a massive switch to oil products,” the IEA said. And, according to a Bloomberg report, “the crisis is deepening the current oil-supply deficit, potentially disrupting OPEC’s careful plan to gradually revive idle production. It’s roiling energy-intensive industries and threatens to curb GDP growth and boost inflation.”
This is occurring while many countries try to move to renewable energy. Concerns about climate change have put green energy closer to the driver’s seat. “According to the IEA’s Global Energy Review, most experts expect renewables to produce nearly 30 percent of all electricity in 2021, with wind and solar generation rising by 17 percent and 18 percent, respectively,” wrote contributing editor Kip Hanson in the December issue of Manufacturing Engineering magazine (“A New World for Energy Parts Manufacturing”).
Consumers are taking note of climate change. Sales of electric vehicles—one of the linchpins in the plan to curb CO2 emissions—are growing rapidly even in North America, one of the late adopters of the technology. According to another Bloomberg report, “Carmakers are racing to make EVs after years of decrying them as unprofitable, and they’ve been caught off guard by their appeal with buyers (emissions rules forced their hand, too). BloombergNEF has boosted its 2021 EV sales forecast for North America 20 percent since the start of the year to 690,000.”
However, despite the impressive growth of renewable energy and EVs, fossil fuels continue to dominate the market. The IEA says that coal demand alone will account for 60 percent more than all renewables combined.
So what’s the future of energy parts production? It will likely continue to include old favorites like pump and turbine housings and gearboxes, and wellhead and drilling components. But there will also be windmill root sections and parts for solar energy plants. Challenging materials like Inconel and Duplex steel will remain popular. But expect that the mix of parts will likely be changing as the world adapts to an uncertain future.
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