Oil demand falls at fastest rate since 1982, says BP

For the first time, demand from developing economies outstripped the OECD

Global oil demand dropped for the first time in 15 years in 2008, falling at its sharpest rate since 1982, according to the industry-leading BP statistical review published yesterday.

Total worldwide consumption dropped by 0.6 per cent – equivalent to 420,000 barrels per day (bpd) – and demand from developing economies, particularly China, outstripped that from OECD countries for the first time. As the developed world curtailed its appetite for oil by 1.5 million bpd – spurred first by eye-watering prices and then by sharply braking economic growth – non-OECD countries also registered slower growth in demand at just 1.1 million bpd.

But the big story last year was China, and not just with regards to oil. Global energy consumption grew by just 1.4 per cent in 2008, its smallest rise since 2001. And China accounted for three-quarters of it.

The US is still the world's most energy-hungry nation, gobbling a whopping 20.4 per cent. But demand was down 2.8 per cent last year, the biggest contraction for a quarter of a century. Meanwhile, Chinese energy usage shot up by 7.2 per cent, its slowest rate for five years but still enough to take the rapidly industrialising nation to a 17.7 per cent share. No other country is even in double figures.

Tony Hayward, the chief executive of BP, said: "The centre of gravity of the global energy markets has tilted sharply and irreversibly towards the emerging nations of the world, especially China."

The shift is not likely to reverse, according to Mr Hayward. "This is not a temporary phenomenon but one that will only increase still more over time," he said. "It will continue to affect prices and bring with it new challenges over economic growth, energy security and climate change."

The short-term effect on prices has been significant – most notably for oil. After a run of price rises unprecedented in the oil industry's 150-year history, the average oil price rose for the seventh consecutive year to hit $97.26 per barrel last year, up 34 per cent from 2007. But it was enormously volatile – soaring to the all-time $147 per barrel high in late July before plummeting to below $40 by the end of the year. Prices are now back on the rise, more than doubling so far this year already (see below).

Gas and coal prices have followed a similar trajectory. Overall gas consumption grew more slowly in 2008, below the decade average at 2.5 per cent. Again the fastest rise was in China, with consumption up by 15.8 per cent, compared with just 0.6 per cent in the US and 3 per cent in the UK. Even though last year's 3.1 per cent rise in coal usage was below the 10-year trend, it is still the fastest growing fuel source. Some 43 per cent of global demand for coal is from China, as was an 85 per cent share of last year's growth. With prices rising faster than for any other fossil fuel, demand grew by a measly 0.6 per cent outside the Middle Kingdom. Inside China, it was up 6.8 per cent.

Despite lower demand for oil, production rose by 0.4 per cent – equivalent to 380,000 bpd – as Opec, the 12-strong cartel of oil-producing countries, tried to cash in on the high prices. Opec production grew by 2.7 per cent, almost 1 million bpd, last year, largely thanks to big increases in the Middle East. Saudi Arabia boosted its output by 400,000 bpd and Iraq by 280,000.

Worldwide proven oil reserves, excluding the controversial Canadian tar sands, stand at 1.26 trillion, enough for another 42 years of production at last year's rates. There is enough gas for another 60 years and enough coal for another 122, says BP.

The oil price bubble: Up, up and away

The steadily rising oil price broke through yet another psychological barrier yesterday, breaking $70 per barrel for the first time since October.

So far this year, oil has nearly doubled and members of the 12-country Opec oil producers' cartel have made the first hints that supply could increase if the price keeps rising.

After an all-time high of $147 last July, the price fell through the floor as the world slid into recession, dropping below $40 by the end of December.

Opec has cut 3.2 million barrels per day (bpd) from production since the autumn to try to halt the collapsing price. But at the group's meeting in Vienna last month, it decided that rising demand obviated the need for further cuts.

Saudi Arabia, the biggest Opec member, is thought to favour a price upwards of $80 per barrel. The Kuwaiti oil minister, Sheikh Ahmad al-Abdullah al-Sabah, intimated a similar target yesterday. "At $75 [Opec] will not increase output, but if it reached $100, then maybe," he said.

Meanwhile, Gazprom, the Russian energy giant, is supporting calls for a new Global Oil Agency to stabilise prices while ensuring investment and avoiding future spikes.

Alexei Miller, Gazprom's chairman, said: "It is only by ensuring a reliably high oil price that we will be able to support investment programs of producers and to launch real projects to increase energy efficiency among consumers."

Suggested Topics
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind-the-scenes to watch the latest series
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
News
Winchester College Football (universally known as Winkies) is designed to make athletic skill all but irrelevant
Life...arcane public school games explained
PROMOTED VIDEO
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
News
i100(and it's got nothing to do with the Great British Bake Off)
News
Angelina Jolie with her father Jon Voight
peopleAsked whether he was upset not to be invited, he responded by saying he was busy with the Emmy Awards
News
Bill Kerr has died aged 92
peopleBill Kerr appeared in Hancock’s Half Hour and later worked alongside Spike Milligan and Peter Sellers
News
news It's not just the world that's a mess at the moment...
Sport
footballPremiership preview: All the talking points ahead of this weekend's matches
News
Keira Knightley poses topless for a special September The Photographer's issue of Interview Magazine, out now
people
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
News
i100
Sport
Mario Balotelli pictured in his Liverpool shirt for the first time
football
Life and Style
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Scientist (SQL,Data mining, data modelling, PHD, AI)

£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...

SAS Business Analyst - Credit Risk - Retail Banking

£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...

Project Manager - Pensions

£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...

KYC Analyst, Birmingham - £200-£250 p/d

£200 - £250 per day + competitive: Orgtel: KYC Analyst, Key Banking Client, Bi...

Day In a Page

Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

The phoney war is over

Russian troops and armour pour into Ukraine
Potatoes could be off the menu as crop pests threaten UK

Potatoes could be off the menu as crop pests threaten UK

The world’s entire food system is under attack - and Britain is most at risk, according to a new study
Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
From Mozart to Orson Welles: Creative geniuses who peaked too soon

Creative geniuses who peaked too soon

After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
Caught in the crossfire of a cyber Cold War

Caught in the crossfire of a cyber Cold War

Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

Salomé: A head for seduction

Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

British Library celebrates all things Gothic

Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

Is the Hard Rock Café worth fighting for?

The restaurant chain's owners are currently embroiled in a bitter legal dispute
Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

In search of Caribbean soul food

Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
11 best face powders

11 best face powders

Sweep away shiny skin with our pick of the best pressed and loose powder bases
England vs Norway: Roy Hodgson's hands tied by exploding top flight

Roy Hodgson's hands tied by exploding top flight

Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

Di Maria and Ronaldo: A tale of two Manchester United No 7s

They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone