Are We Ready for Change?

The president of Shell Oil Company and the chairman of Simmons & Company International tackled three fundamental questions from distinctly different perspectives at the 2006 HBS Energy Symposium.

The 2006 HBS Energy Symposium opened on October 24 with the daunting aim of answering three fundamental questions: What drives our world? How does our future look? Are we ready for change? Fortunately, the HBS Energy Club with the help of its sponsors, McKinsey and BCG, managed to assemble a great lineup with some of the most senior speakers in the industry to start debating some of the relevant answers.

Some of the subjects covered during the Symposium included the role of technology in tapping additional resources and moving to new sources of energy, the current geopolitical challenges affecting the industry and a description of the possible supply-demand scenarios for the next decades including some steps to mitigate the risks associated with the high volatility of the energy prices.

Interestingly, the Symposium did not lack for different points of view. John Hofmeister, President of Shell Oil Company, kicked off the first half of the conference speaking about an indefinite supply of energy available in affordable ways, but not without challenges. Mr. Hofmeister explained that the combination of conventional oil and gas, including resources presently off limits in offshore waters and on federal lands, as well as unconventional oil and gas, liquefied natural gas, and new technologies should be coupled with a culture of conservation in order to provide abundant supplies for the world’s energy needs. Challenging part of this argument, Matthew Simmons, Chairman of Simmons & Company International, led the second half, highlighting that much of the world’s usable energy resources are too mature and are now in production decline. Mr. Simmons gave the audience a summary of a significant amount of existing data pointing to a near term peaking of both oil and gas supplies. How the world prepares for what could become a rapid transition to consuming less energy, he submitted, is the greatest challenge of the 21 century.

With a contribution close to a third of the world GDP, the energy industry is one of the largest sectors in the economy. More relevant to us will be the current challenges and uncertainties lying ahead, which makes the energy world arguably one of the most interesting places for graduates to have a profound and lasting impact with their careers. As pointed out several times during the Symposium, the energy path offers fantastic and rewarding opportunities for those students eager to step outside the traditional choices. Undoubtedly, HBS students ought to become part of the much needed answer for the questions posted this year by the Energy Symposium.

November 13, 2006
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