Kemp: Global Oil Demand Shows No Sign of Peaking

Kemp: Global Oil Demand Shows No Sign of Peaking
'Peak oil demand' has become a fashionable concept among climate campaigners but the evidence suggests oil consumption is growing at the fastest rate for a decade and shows no sign of letting up.

Reuters

John Kemp is a Reuters market analyst. The views expressed are his own.

LONDON, June 21 (Reuters) - "Peak oil demand" has become a fashionable concept among climate campaigners but the evidence suggests oil consumption is growing at the fastest rate for a decade and shows no sign of letting up.

Global oil consumption increased by nearly 1.9 million barrels per day (bpd) in 2015, the largest annual increase since 2004, apart from the post-crisis bounce recorded in 2010.

Most forecasters predict consumption will grow by another 1.5 million bpd in 2016 and a similar amount in 2017, which would make it the strongest sustained period of growth since 2004-2006.

Oil consumption in the advanced industrial economies that are members of the Organisation for Economic Cooperation and Development (OECD) peaked at 50 million bpd as far back as 2005.

Between 2006 and 2014, OECD consumption declined in seven out of nine years.

By 2014, OECD oil consumption had fallen by around 5 million bpd, or 10 percent ("BP Statistical Review of World Energy," 2016).

In the OECD countries, consumption does indeed seem to have "peaked" thanks to a combination of high and rising oil prices, energy efficiency mandates and prolonged economic weakness.

But in the rest of the world, consumption has continued growing rapidly.

Non-OECD oil use grew by more than 13 million bpd between 2005 and 2014, an average of almost 1.5 million bpd per year.

In 2015, spurred by a combination of economic expansion and much lower fuel prices, even the OECD returned to growth with the first consumption increase since 2005 (again excepting the unusual 2010 post-recession bounce).

Over the entire 2005-2015 period, global consumption increased by more than 10 million bpd, as the growing thirst for oil in emerging markets more than offset lower OECD demand.

With the global economy still expanding and oil prices at the lowest level for 10 years, consumption is set to continue growing strongly for the foreseeable future.

Top Oil Consumers

In 2013, non-OECD countries consumed more oil than the advanced economies for the first time and there is no sign that consumption growth is slowing, let alone peaking, in the non-OECD economies.


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