Urbanization and unconventional oil development are megatrends that are likely to move in tandem. While they may seem like unlikely allies, private and public investments made in both of these sectors will serve to either escalate or abate oil use, climate change and social tensions. A traffic-snarled, gridlocked city is hostile and uninviting—economic activity cannot thrive if it takes hours to traverse.
Moreover, a car-centered urbanization pattern multiplied over millions of unnecessary trips drives oil development. The likely result is exploitation of all available oil resources, making it hard to pick and choose so that the new oils with the most damaging climate and local impacts remain in the ground.
The current record number of people moving to cities internationally increases needs and demands for travel within and beyond them. On its current course, urbanization is leading to greater oil consumption. But there is an alternative if the expansion of cities is built out in ways that reduce dependence on cars, thereby significantly avoiding the outcome where urbanization drives oil development.
This requires thoroughfares that offer safe, comfortable walking spaces, separating bicycles from cars, and providing easy access to mass transit that can all reduce demand for car travel. Compact neighborhoods have lower energy consumption than sprawling ones. Minimizing the valuable space devoted to parking can reduce oil use while at the same time making room for increased commercial development that generates tax revenues.
Smart urbanization dovetails perfectly with prudent oil development. This is perhaps especially true in Brazil today. In the face of urban unrest, Brazilian President Dilma Rousseff is hatching a plan to improve public transport, with royalties from the country's oil resources invested in urban mobility along with education and health care.
These oil revenues will be significant given the nation's hundreds of billions of barrels of as yet unexploited reserves. But development of these unconventional ultradeep pre-salt oil and oil shale resources will be challenging. Investments can be tied up due to resource nationalism—such as when Petrobras (Brazil's semipublic oil giant) prohibited other companies control by claiming sole operator status.
Politicians also disagree about how to divide oil royalties between states with different resource holdings. Social contracts that keep petrol prices low to fight inflation work at odds with efforts to check car ownership and effectively build out public transportation.
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Economic and environmental concerns are also a factor. Developing these unconventional oil deposits—whether in ultradeep waters, buried under rocks and a thick layer of salt or trapped as immature oil in dense source rocks—will require oceans of cash. They also raise ecological concerns.
Where does Brazil fit in the global energy picture? American tight oil and shale gas have, at least for the time being, displaced Brazil and others as the world's most attractive energy plays. The economic viability of ancient oils tied up in bitumen and immature oils tied up in kerogen mean that internationally there are enough hydrocarbons to fuel the world for centuries.
This clearly indicates that private and public decisions are no longer being driven over fears of oil shortages as they were beginning in the 1970s. But new choices must be confronted about the plethora of oils available in Brazil, the U.S., Canada and elsewhere.
Urbanization and unconventional oils are demanding massive investments that can fundamentally change lives. Infrastructure that is commissioned and built today to accommodate these two megatrends will lock in resource utilization and climate patterns for generations to come.
The design of new and expanding metropolises will determine how people move around, their oil demands and their carbon footprints.
With the U.N. forecasting that 70 percent of the world's population will reside in urban areas by 2050, smart cities and strategic oil decisions are critical to ensuring a path to a politically stable and secure energy and climate future.
—By Deborah Gordon.
Gordon is a senior associate in the Energy and Climate Program at the Carnegie Endowment for International Peace.