Demand for Oil & Gas

The demand side of peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. After reaching a high of 85.6 million barrels (13,610,000 m3) per day in 2007, world consumption decreased in both 2008 and 2009 by a total of 1.8%, due to rising fuel costs. Despite this lull, world demand for oil is projected to increase 21% over 2007 levels by 2030 (104 million barrels per day (16.5×106 m3/d) from 86 million barrels (13.7×106 m3)), due in large part to increases in demand from the transportation sector. A study published in the journal Energy Policy predicted demand would surpass supply by 2015 (unless constrained by strong recession pressures caused by reduced supply).

Energy demand is distributed amongst four broad sectors: transportation, residential, commercial, and industrial. In terms of oil use, transportation is the largest sector and the one that has seen the largest growth in demand in recent decades. This growth has largely come from new demand for personal-use vehicles powered by internal combustion engines. This sector also has the highest consumption rates, accounting for approximately 68.9% of the oil used in the United States in 2006, and 55% of oil use worldwide as documented in the Hirsch report. Transportation is therefore of particular interest to those seeking to mitigate the effects of peak oil.

Although demand growth is highest in the developing world, the United States is the world’s largest consumer of petroleum. Between 1995 and 2005, U.S. consumption grew from 17,700,000 barrels per day (2,810,000 m3/d) to 20,700,000 barrels per day (3,290,000 m3/d), a 3,000,000 barrels per day (480,000 m3/d) increase. China, by comparison, increased consumption from 3,400,000 barrels per day (540,000 m3/d) to 7,000,000 barrels per day (1,100,000 m3/d), an increase of 3,600,000 barrels per day (570,000 m3/d), in the same time frame.

As countries develop, industry and higher living standards drive up energy use, most often of oil. Thriving economies, such as China and India, are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996-2006. In 2008, auto sales in China were expected to grow by as much as 15-20%, resulting in part from economic growth rates of over 10% for five years in a row.

Although swift, continued growth in China is often predicted, others predict China’s export-dominated economy will not continue such growth trends due to wage and price inflation and reduced demand from the United States. India’s oil imports are expected to more than triple from 2005 levels by 2020, rising to 5 million barrels per day (790×103 m3/d).

The International Energy Agency estimated in January 2009 that oil demand fell in 2008 by 0.3%, and that it would fall by 0.6% in 2009. Oil consumption had not fallen for two years in a row since 1982-1983.

The Energy Information Administration (EIA) estimated that the United States’ demand for petroleum-based transportation fuels fell 7.1% in 2008, which is “the steepest one-year decline since at least 1950.” The agency stated that gasoline usage in the United States may have peaked in 2007, in part due to increasing interest in and mandates for use of biofuels and energy efficiency.

The EIA now expects global oil demand to increase by about 1,600,000 barrels per day (250,000 m3/d) in 2010. Asian economies, in particular China, will lead the increase. China’s oil demand may rise more than 5% compared with a 3.7% gain in 2009, the CNPC said.

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