Specials
Ten years of oil demand
The International Energy Agency (IEA) recently published the data of world oil demand in 2010. This gives us a good opportunity not only to see what happened last year, but also to discover what happened in the last ten years and to identify the trends that characterized these years . With the help of the IEA statistics and the data of Eni’s new World Oil & Gas Review , we shall try to do so.
Source: eni calculations based on IEA data
In 2010, world consumption of oil started to grow again reaching a new record level, equal to approximately 88 million barrels per day (bpd). World demand also increased during the 2000-2010 period, and registered a variation of almost 11 million bpd (equal to a 12.4% increase). However, the dynamics have not always been positive in these ten years, because in the last period there were situations in which oil consumption even decreased.
In particular, the graph of world oil demand shows a relevant negative drop in the years 2008 and 2009, at the time of the most acute phase of the world economic crisis. It was only in 2010, as already noted, that consumption started to rise again. In order to better understand what happened, let us start by analyzing the more recent data in detail.
Source: eni calculations based on IEA data
If we compare, in 2009 and 2010, the percentage variations, year after year, of the oil demand in the various geographical areas, we see that they reflect different economic scenarios, stemming from opposite dynamics. In fact the industrialized countries (OECD area), whose consumption decreased remarkably from 2008 to 2009 move in one direction , while the emerging developing countries , (headed by China, India, Saudi Arabia and Brazil) move in the opposite direction, and continue to increase their oil consumption without showing any drop.
The drop in consumption recorded in the OECD countries from 2008 to 2009 is attributed mainly to the economic crisis in the industrialized countries which was recorded in those years.
The economic and financial crisis originated in the United States in July 2007, and subsequently spread throughout the world. However it was particularly virulent in the OECD countries starting from October 2008. In particular, the crisis provoked a great amount of damage to the economies of the countries that were most exposed from a financial standpoint. Due to the crisis, a general drop in the consumption of raw materials was seen. In particular the world demand of oil showed a 1.3% drop from 2008 to 2009. The decrease did not become even worse only thanks to the emerging economies in the Asian area, of which China and India are the most prominent countries, that maintain their unstoppable trend of growth in demand for energy, that is necessary to support a constant economic and industrial development. In this way, on a world scale, the big decrease in consumption, recorded in the industrialized Countries such as North America (-3.8% compared to 2008) and Europe (-6% compared to 2008), was partly compensated. As pointed out, in 2010 there was an increase in oil consumption on a global scale (+ 3.3% compared to 2009), due to the unrelenting economic growth in the emerging Countries, and also due to the anti-crisis policies that were adopted, that favoured a recovery in the areas that were most affected by the recession in the economy (North America, former Soviet Union countries, developed countries in the Pacific). In these latter areas oil consumption showed a positive trend, even though the losses recorded in 2009 were not entirely recovered. In Europe instead, also in 2010 oil demand continued to decrease (-0.3% compared to 2009), even though only slightly, maintaining the negative trend of several years.
With regard to the total consumption of each individual country, in 2010 the United States were confirmed the leading country for the consumption of oil, with 19.5 million bpd (22.2% of the world total). US oil consumption is equal to 2 times the amount of the second country, China (9.4 million bpd) and 4.4 times that of the other large Country, Japan ( 4.4 million bpd). With regard to our country, Italy, oil consumption in 2010 amounted to 1.5 million bpd. The consumption of crude oil in the industrialized countries (OECD) still today accounts for more than half of the total amount of world consumption (52.4%) however a constant decrease has been observed over the years (in 2000 it amounted to 62.3%).
Therefore, what happened in the last decade?
Source: eni calculations based on IEA data
From 2000 to 2010, in the area of the industrialized countries, after a period of constant growth, the trend of oil demand showed a slowing down , and an overall 4% decrease was recorded in the reference period. The decrease in the trend of the demand is due to a number of causes, among which: greater energy- efficiency (particularly in the transports sector, where a large part of oil consumption is concentrated), the change in the different sources of energy, and the development of renewable energy, savings that were induced by the strong increase in oil prices registered during the period (in 2000 , the cost of a barrel was 28 dollars , while in 2008 the cost rose to almost 80 dollars per barrel), and last, as we have seen, the impact of the economic and financial crisis of the end of the decade.
With reference to the developing emerging countries (non-OECD area) the trend of oil demand in the period 2000-2010, showed a constant growth. China was the leading country, with a 51.2% increase in oil consumption at the end of the period, compared to 2000. In practice, almost half of the global increase in oil consumption in the decade (+ 10.9 million bpd) is due to China’s hunger for energy (+ 4.8 million bpd); followed by the Middle East (+ 2.5 million bpd, equal to a 33% increase), India (+ 30%), Africa (+24%) and Latin America (+22%).
All things considered, we may say that during the decade, consumption in the industrialized countries decreased, in particular due to the drop in the demand in Europe and in Japan (the greatest consumer in the OECD Pacific area). Therefore, has the peak in oil demand in this area of the world already been reached, and in the next few years will we see a slow but inexorable drop? It may be early to say so, but the history of the last few years has highlighted the current trend, furthermore there are numerous public initiatives in favour of a saving in oil consumption and a more efficient use of oil. Most of the consumption of crude oil in fact is for the transports sector and, in fact, it is here that a great effort is being concentrated to use less oil, and alternative engines are being proposed (driven by natural gas, electricity, or bio combustibles). Or by increasing the efficiency of the existent traditional engines that run on oil and diesel: in fact there still are many technical possibilities of increasing the number of kilometres covered with a litre, for example using hybrid engine automobiles, that make use of oil and electricity for the engine.
A geographic area in which, instead, oil consumption will surely increase as a result of a constantly positive economic growth, is that of the emerging economies, in particular the Asian ones (China and India). Also the Middle Eastern countries, and the Latin American countries will most probably continue to increase their oil demand, similarly to the 2000-2010 period.
What will be the overall effect of the two dynamics on future consumption of oil on a world scale? It is difficult to say, and the opinions on the topic differ from each other. Many, almost all, the experts believe it will continue to grow, but some think it will grow at a slower rate, with lower percentages; others believe the growth will be big, and driven by the development in the emerging countries. Surely the increased attention to the problems of climate change and emission of polluting substances in the air, will lead to – wherever possible – an attempt to contain the increase in energy consumption. On the other hand it is not possible to prevent the less rich or the poor countries from developing, by taking away from them the combustibles that they need to drive the economy and the industry and increase their level of well-being, bringing it to a level that is equal to that of the industrialized countries.
A –partial- solution could in fact be to continue to rebalance the world consumption of oil, further decreasing that of the richer countries that often “waste” energy, to the advantage of the poorer countries. A useful indication, in order to understand how great the difference is between the rich countries and the poor countries and to have an idea of how much more oil would be necessary if even these latter countries wished to reach our level, is to examine the pro capita oil consumption. We can analyze the present situation helping ourselves with the statistics that are presented in the World Oil & Gas Review, which has been recently published by eni.
In 2009, each inhabitant of the planet consumed an average of 4.6 barrels of oil.
As in every statistical average, also the “mean consumption” conceals great disparities in the distribution in the different countries. In fact, in the countries with a high income, each person consumes up to an average of 16.8 barrels per year, in the low income countries, instead, the mean consumption is only 0.51 barrels per year, i.e. approximately 33 times less than the former.
Source: eni calculations based on IEA data
Furthermore, in each country or geographic area, the disparity is even more marked.
In fact, in the year 2009, total consumption of oil in the areas of North America (21.2 million bpd) and Europe (18.5 million bpd) were the same as in the Asian Pacific area, which includes China and India (26.1 million bpd). However these data do not clearly explain the imbalance in the consumption if the number of people living in these countries is not considered, and if the data regarding pro capita consumption are not observed. This indicator shows the existence of great disparities in the geographic areas.
North America is the area in which pro capita oil consumption is greatest (in 2009, on average, each citizen of the United States consumed 22.7 barrels, each Canadian 23.6).
Overall, on average, each citizen in the United States and Canada consumes almost 3 times the amount of a European citizen (8.7 barrels per year), approximately 10 times the amount of a Chinese (2.3 barrels per year), more than 20 times the consumption of an Indian citizen (1.04 barrels per year) and more than 100 times the amount of an Ethiopian (0.2 barrels per year).
From these few data it can clearly be seen that in North America each person consumes a large amount of oil, perhaps too much, and it would be opportune to use more efficient technologies and save energy. The United States are aware of this, and in fact in the past few years they have decided to set objectives to decrease the oil consumed by their cars per kilometre, as these cars consume the most, on a world scale. Just think that in order to travel by car and transport goods with vans and trucks, the United States account for approximately one tenth of the annual world consumption of oil .
But let us go back to the analysis of the consumption of crude oil per person. In the past 10 years, the average pro capita consumption on a world scale has decreased, even though only a little, from 4.7 barrels in 2000 to approximately 4.6 barrels in 2009. In the high income countries, this indicator was shown to be substantially stable up to 2007 (about 18 barrels per year) and then it started to decrease (17.5 in 2008 and 16.8 barrels a year in 2009), also because of the economic crisis. In China pro capita consumption almost doubled in ten years even though the levels are still very low. Considering that we are speaking of a country with a population of approximately 1.4 billion people we can say that it has been a remarkable growth with a great impact on a world scale (and we have seen this when, previously, we analyzed the trend of total consumption in the period 2000-2010). In the low income countries, instead, pro capita consumption grew very little and therefore remained extremely low, equal to 0.51 barrels per year per person. It is a clear signal of the poverty and the extremely destitute life conditions that continue to afflict these populations.
What we have seen up to now are only a part of the large amount of data that are available for each country. If you wish to examine these topics in further detail you will find useful and detailed statistics in eni’s World Oil & Gas review.
In order to study the energy requirement of the planet, it is necessary to have updated, reliable and exhaustive scientific analyses and data history, by means of which it is possible to identify the trends that will characterize the future of energy. And it is with this in mind that Eni has published the World Oil and Gas Review (WOGR), which has now reached its ninth edition. WOGR is one of the most important sources of information in the oil and natural gas market. Also in this edition, the oil and natural gas industry and markets are illustrated with data regarding production, reserves, consumption, imports and exports. Each one of these indicators is provided for each country, for each geographic area, and for each market area. A complete panorama of the international trade of natural gas is provided, both for gas supplied through the pipelines and in the form of Liquefied Natural Gas (LNG). These figures are accompanied by specific indicators, graphs and lists that provide an additional form of interpretation, instead of a presentation of only absolute values.
Link
The report can be downloaded from the eni website
Furthermore , a dedicated site is available, in which it is possible to directly obtain data on gas and oil : World Oil & Gas Review
We still have to answer a last question: how has the oil demand been in Italy, in these past years?
Source: eni calculations based on IEA data
If we look at the trend of oil consumption during the reference period 2000-2010, it can be noted that from 2003 the trend has shown a constant decrease The decrease in the oil demand in Italy is mainly due to the energy choices of the country. In fact natural gas, also because of the environmental advantage that characterizes it, has gradually taken the place of oil as a fossil fuel for the production of energy in the sector of generation of electricity, in the industrial sector and also for heating buildings. Furthermore, in 2008 and 2009, also Italy, like the other industrialized countries, was hit by the economic and financial crisis. However in 2010 the decrease in the trend was confirmed and there were no “rebounds” in consumption, as in other countries. Also in our country, therefore, we can say that perhaps we have reached the peak of oil consumption (in the first years of 2000) and that in the years to come, there is a high probability that there will be a further decrease, or a substantial stability in consumption.
By Giuseppe Sammarco, Benedetta Palazzo, Andrea Portaluppi
