|June 11, 2009|
BP's Tony Hayward warns of dwindling demand for oil
|It used to be the nightmare scenario that the world would run out of oil and civilisation would grind to a halt. Not so, Tony Hayward, the chief executive of BP, said yesterday: global oil production will decline, but because of dwindling demand, not because of a scarcity of supplies of crude. |
Gains in energy efficiency will lead, ultimately, to falling oil demand, he said. Indeed, consumption of oil in the developed world fell by 1.6 per cent last year, the largest drop since 1982, and the decline is set to continue.
Mr Hayward's prediction of weakening demand came as the energy company unveiled its annual review of energy trends. The BP Statistical Review of World Energy showed that, for the first time, total energy demand in poorer countries, including China and India, exceeded the hunger for power and fuel in wealthier nations in the Organisation for Economic Co-operation and Development (OECD).
According to BP, non-OECD energy consumption accounts for 51 per cent of the total. Demand for energy in the emerging world economies continued to rise in 2008, but among the developed nations energy demand fell by 1.3 per cent.
"The world will be able to deliver the oil demand required," Mr Hayward said. "BP is unlikely to sell more gasoline to Americans than it sold in the first half of 2008. Energy efficiency means demand from OECD countries will continue to decline."
BP said that there were 1.258 trillion barrels of proven oil reserves left in the ground, enough to supply the world for 42 years at present production rates. It said that reserves of gas were sufficient for 60 years and coal for 122 years. "Our data confirms that the world has enough proved reserves . . . to meet the world's needs for decades to come," Mr Hayward said, adding that constraints on production were "human, not geological".
Will Whitehorn, an executive with Sir Richard Branson's Virgin Group, who chairs a UK industry task force on peak oil and energy security, called the findings overoptimistic. He said: "Many of the reserves figures are overstated."
BP's report showed that total global oil consumption in 2008 had slipped by 420,000 barrels a day to 84.4 million barrels, compared with 84.8 million barrels in 2007. It added that demand in the 30 industrialised countries of the OECD had slipped by 3.5 per cent, or 1.5 million barrels, representing the third consecutive annual decline. That fall was led by a 6.4 per cent slide in the US oil market of nearly 1.3 million barrels per day. Nevertheless, consumption in the emerging economies of Africa, China and the Middle East continued to expand briskly.
The closely watched annual study from BP reflected an unprecedented year in the global oil market, during which prices soared to a record high of more than $147 a barrel last July before plummeting to slightly more than $30 in December as demand evaporated amid an intensifying global recession.
Oil prices exceeded $71 a barrel --- a seven-month high --- yesterday after figures from the US Government indicated that American stockpiles of crude were falling faster than expected. The price of a barrel of London Brent crude rose after the US Energy Information Administration said that oil stocks had slipped by 4.4 million barrels last week.
Although demand for oil faltered, the BP report showed that global coal consumption had risen by 3 per cent last year to a total of 3.3 billion tonnes. "For a sixth consecutive year, coal was the fastest-growing fuel, with obvious implications for global carbon dioxide emissions," Mr Hayward said. The gains were led by consumption in China, where dozens of new coal-fired power plants are being built every year to feed the country's growing demand for electric power.
However, China plans to significantly increase its use of wind and solar power and aims to generate as much as 20 per cent of its energy from renewable sources by 2020, Zhang Xiaoqiang, vice-chairman of China's national development and reform commission, said.
Raw material prices sink