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Global Energy Consumption Rises as Supplies Lag; Coal Still the Fastest Growing Fuel in the World

Bpstat1
Global consumption of energy, in million tonnes of oil equivalent. Click to enlarge.

According to the just-published BP Statistical Review of World Energy 2008, the ongoing strength of world economic growth last year, despite financial market turmoil which began in August, continued to support global energy consumption. Although growth in primary energy consumption slowed in 2007 compared to 2006, at 2.4% it was still above the 10-year average for the fifth consecutive year.

Coal remained the fastest-growing fuel, but oil consumption grew slowly. Oil is still the world’s leading fuel, but has lost global market share for six consecutive years, while coal has gained market share for six years.

The defining feature of global energy markets remains high and volatile prices, reflecting a tight balance of supply and demand. This has put issues such as energy security and alternative energies at the forefront of the political agenda worldwide.

—Tony Hayward, BP CEO

The oil price has been on an upward path for more than six years, which according to BP’s data series going back to 1861, is the longest period of rising prices on record.

Dated Brent crude oil averaged $72.39 per barrel in 2007, an increase of 11%. Prices rose steadily throughout the year, from a low of just over $50 in mid-January to above $96 by year-end. Temporary bottlenecks caused the USA benchmark WTI to trade at a discount to Brent for the first time since 1979. Discounts for heavy, sour crudes remained high reflecting constraints on upgrading capacity in refining.

Global oil consumption grew by 1.1% in 2007, or 1 million barrels per day (bpd), slightly below the 10-year average, according to the Review, while global oil production fell by 0.2%, or 130,000 bpd, the first decline since 2002.

Consumption in the oil exporting regions of the Middle East, South and Central America, and Africa accounted for two-thirds of the world’s growth. The Asia-Pacific region grew by 2.3%, even though growth in China and Japan was below average, with strong growth in a number of emerging economies. OECD consumption fell by 0.9%, or nearly 400,000 bpd.

OPEC production dropped by 350,000 bpd due to the cumulative impact of production cuts implemented in November 2006 and February 2007. Increased output in Angola and Iraq, and growing supply of condensates/NGLs, partially offset larger cuts in other OPEC countries.

Oil production growth outside OPEC remained weak, rising by just over 200,000 bpd in 2007; OECD output fell for a fifth consecutive year. FSU (Former Soviet Union) output rose by nearly 500,000 bpd, with Azerbaijan and Russia each growing by more than 200,000 bpd.

Proved oil reserves were essentially flat in 2007—at 1.24 trillion barrels—and are sufficient to meet current production for more than 41 years, according to BP. However, the 2006 world total was revised up by 31 billion barrels upon receipt of more complete information.

World natural gas consumption grew by an above-average 3.1% in 2007, although only North America, Asia-Pacific, and Africa recorded above average regional growth. The USA accounted for nearly half of the world’s gas consumption growth, driven by cold winter weather and strong demand for gas in power generation. Chinese consumption grew by 19.9% and accounted for the second-largest increment to global gas consumption. EU consumption declined by 1.6%—the second consecutive decline-in face of warm winter weather.

Gas production rose by 2.4% in 2007. The USA accounted for the largest increment to supply, growing by 4.3%, the strongest growth since 1984. EU production declined by 6.4%, with UK output falling by 9.5%, the world’s largest volumetric decline for a second consecutive year. A small decline in Russian production was more than offset by strong growth elsewhere in the FSU. China and Qatar recorded the second- and third-largest increments to production, increasing by 18.4% and 17.9% respectively.

LNG shipments rose by 7.3%, supported by continued growth in shipments from Qatar and Nigeria. USA LNG receipts rose by one-third as a large price premium to European spot markets resulted in the diversion of cargoes to the USA.

Other highlights of the Review include:

  • Coal was the fastest growing fuel in the world for the fourth consecutive year. Global consumption rose by 4.5%. Consumption growth was widespread, with growth in every region except the Middle East exceeding the 10-year average. Chinese coal consumption rose by 7.9%, the weakest growth since 2002, but more than two-thirds of global growth. Indian consumption rose by 6.6%, and OECD consumption rose by 1.3%, both above average figures.

  • Nuclear power output fell by 2%, the steepest decline on record. However, more than 90% of this decline was accounted for by Germany and Japan—which saw the world’s largest nuclear power plant closed following an earthquake. Hydroelectric generation increased by 1.7%, slightly below the 10-year average. Increased capacity in China and Brazil was partially offset by drought-related declines in the USA and Southern Europe.

  • Renewable energy remains a small share of total global energy use, but most renewable sources experienced rapid growth in 2007. Ethanol output rose by 27.8%. Global capacity for wind and solar electricity generation grew broadly in line with historical averages of 28.5% and 37%, respectively.

Resources

Comments

Anne

Global oil consumption grew by 1.1% in 2007, or 1 million barrels per day (bpd), slightly below the 10-year average, according to the Review, while global oil production fell by 0.2%, or 130,000 bpd, the first decline since 2002.

I got curious and looked into the report. I noticed a consistent difference between production and consumption, the latter being consistently higher than the former.

Can somebody explain to me how this is possible?

HarveyD

Anne:

Very good question. Somebody must have used their accumulated reserves/stocks. A differential of about 1.13 million barrel/day is equivalent to only 412 million barrels for the whole year.

One thing is about certain, the world will use more and more energy unless we are hit with a serious economic recession and much more efficient vehicles and HVAC are massively introduced.

However, as many very large nations like China, India, Brazil, Russia etc raise thieir living standards, they will do like USA, Canada, Australia, EU etc and consume much more energy.

The only way to reduce the negative impacts would be to switch to much cleaner electrical energy and progressively phase out oil, coal and ICE vehicles.

@ Anne ~> Can somebody explain to me how this is possible?
We have lots of oil in storage, not just the strategic reserves. Overproduction in past years was stored. as Harvey pointed out, some of this stored oil gets used when there is a production shortfall. What we see now is a production decline, and a dip into all the stored oil.

We know this flat and now falling world oil production level is due to "peak oil" and that future oil production will never increase.

Where I was a bit surprised was seeing the claim that "Coal was the fastest growing fuel in the world for the fourth consecutive year. Global consumption rose by 4.5%."

Obviously this coal claim referred to total growth capacity, because "renewable sources experienced rapid growth in 2007. Ethanol output rose by 27.8%. Global capacity for wind and solar electricity generation grew broadly in line with historical averages of 28.5% and 37%, respectively."

I think that the renewable sources are now large enough in total capacity to deserve a place on that graph. Renewable energies are the fastest growing energy source by percentage growth.

@ Anne ~> Can somebody explain to me how this is possible?
We have lots of oil in storage, not just the strategic reserves. Overproduction in past years was stored. as Harvey pointed out, some of this stored oil gets used when there is a production shortfall. What we see now is a production decline, and a dip into all the stored oil.

We know this flat and now falling world oil production level is due to "peak oil" and that future oil production will never increase.

Where I was a bit surprised was seeing the claim that "Coal was the fastest growing fuel in the world for the fourth consecutive year. Global consumption rose by 4.5%."

Obviously this coal claim referred to total growth capacity, because "renewable sources experienced rapid growth in 2007. Ethanol output rose by 27.8%. Global capacity for wind and solar electricity generation grew broadly in line with historical averages of 28.5% and 37%, respectively."

I think that the renewable sources are now large enough in total capacity to deserve a place on that graph. Renewable energies are the fastest growing energy source by percentage growth.

@ Anne ~> Can somebody explain to me how this is possible?
We have lots of oil in storage, not just the strategic reserves. Overproduction in past years was stored. as Harvey pointed out, some of this stored oil gets used when there is a production shortfall. What we see now is a production decline, and a dip into all the stored oil.

We know this flat and now falling world oil production level is due to "peak oil" and that future oil production will never increase.

Where I was a bit surprised was seeing the claim that "Coal was the fastest growing fuel in the world for the fourth consecutive year. Global consumption rose by 4.5%."

Obviously this coal claim referred to total growth capacity, because "renewable sources experienced rapid growth in 2007. Ethanol output rose by 27.8%. Global capacity for wind and solar electricity generation grew broadly in line with historical averages of 28.5% and 37%, respectively."

I think that the renewable sources are now large enough in total capacity to deserve a place on that graph. Renewable energies are the fastest growing energy source by percentage growth.

Henrik

The difference between consumption and production is only 1.3%. All statistics are damaged by uncertainty and errors. I think this is the main explanation and then perhaps inventories.

Good to see OECD was able to reduce consumption of oil by 400.000 per day despite having a fine economic growth. That was caused by oil going up just 11% in price in from 2006 to 2007. Expect a much bigger drop in OECD oil consumption this year when oil prices are on track to increase from averaged $72.39 per barrel in 2007 to perhaps an average of $130 for 2008.

Sad to realize that wind and solar are still so small that it isn’t worth mapping it. Wind is 1.6% of global electricity production ultimo this year. This is probably 0.5% of global energy consumption. However, wind will contribute almost 11% of all new electricity installed in 2008. Growing at 30% it will not take long to do all new electricity needed to sustain continued economic global growth.

Matthew

We know this flat and now falling world oil production level is due to "peak oil" and that future oil production will never increase.

We "know" no such thing.

The whole "peak oil" theory depends on two assumptions - technology remaining constant, and no new sources of oil being tapped.

Obviously, both of these assumptions are wrong. Oil production technology constantly advances...that's why the Bakken field has been upgraded from 151 million barrels recoverable to 3+ billion barrels. There will almost certainly be future upgrades to that number. Offshore drilling technology also improves continuously, which is why Brazil's recent discoveries of large quantities of offshore oil are so promising. Twenty years ago that oil would have been unrecoverable.

Likewise, new oil fields are poised to be tapped. As prices continue to rise, there will be increasing pressure for the U.S. to drop its silly bans on offshore and ANWR drilling. The estimates are that there's nearly 100 billion barrels of oil off the U.S. coast; that's roughly the amount of oil in all of Iran or Kuwait. Let's not forget that Iraq is continuing to increase production (they're past their pre-war highs even now), Brazil will soon produce much more, and so on.

Even places like Mexico, with its incompetent state oil company, are starting to look at ways to get assistance from competent private-sector companies. If and when this occurs, even currently-declining fields such as Cantarell will likely increase production.

Peak oilers are no different than the religious cultists who "know" when Jesus will return. "He's coming Friday! No, wait, my calculations were off...it's next Friday! Er, no, *now* I got it..."

Henrik

Something that is worth observing is that while global oil production is growing at about 0% the oil consumption in the oil exporting countries is growing fast. This means the available exportable oil is dropping fast. This is new. Previously exportable global oil was increasing. This must be very important at explaining why oil suddenly starts to raise so fast in price as we have seen it since primo 2007. Since higher oil prices means more growth and therefore more consumption in the oil exporting countries we should not see any ease in oil prices unless importantly more oil is produced. Those who could produce more are not going to now that they have realized how much more they are able to make in this industry. The Russians said recently that oil would go to $250. If Russia decreases their oil production with 1 million bpd this is where it will go and they will still make more money in total.

Kit P.

“Where I was a bit surprised was seeing the claim that "Coal was the fastest growing fuel in the world …”

Anyone who is surprised by this fact demonstrates a lack critical thinking and being clueless. If you plotted renewable energy on the same graph it would be bout the same magnitude as nuclear but that would be misleading.

First, compare apples to apples and oranges to oranges. Second, insignificant sources of energy should not be compared to important sources.

When considering renewable energy for electric power, there is a category called “renewable energy other” that excludes biomass and hydro generated electricity. That is because wind and solar do not produce enough electricity to discuss except in blogs like this.

So why is a ‘free’ energy source not main stream? So far, wind and solar for electricity generation has proven to not be sustainable. Will the current generation of equipment still be operating in 10 years? Will new capacity be able to put in service fast enough to keep up with demand?

The apparent answer is that wind and solar will be smaller market share compared to fossil each year until the billions who want to live a lifestyle that includes electricity have their needs met.

Henrik

@Kit P.
The market share of wind and solar in global energy is not decreasing. It is of cause increasing as long as their growth rates are higher than the growth rates of other energy forms. This is elementary math.

Ike Solem

Hardly. Solar and wind are the most abundant energy resoruces on the planet - how many watts fall on the earth every second? Every minute? Every hour? Every day?

Modern energy needs can be completely met with solar, wind and biofuels, regardless of what the fossil fuel lobby spokespeople say.

Tripp

Mattew, "Peak Oil" only depends on oil being a finite resource. It is, therefore there will be a peak. The timing of the peak is what is in question.

Kit P

If total demand increased 100 units of electricity with wind being 1% and doubling. Wind output would increase to 2 units or 2% of the market. In this example Henrik would be correct.

However, if demand increased 1000 units with 998 units coming from fossil, then wind would have a smaller market share. In this example Henrik would be incorrect.

However, in either case ghg is increasing. Either by 98 units or 998 units.

There are also some places like China and South Africa where more coal would have been used to meet demand. Demand was limited by supply.

Matthew

Mattew, "Peak Oil" only depends on oil being a finite resource. It is, therefore there will be a peak. The timing of the peak is what is in question.

It is true that there will be a peak, yes. But it cannot be said that the peak is now, because the oil fields that are being exploited now are not the sum total of all the oil fields on the planet; there are yet many hundreds of billions of barrels of oil that can be added to reserves. So for the purposes of peak oil calculations, reserves cannot yet be treated as finite.

But I agree that a peak in oil production will someday come...but for that matter, Jesus will probably show up again as well.

Hybrid Fan

official productions figures a bit low? OPEC countries often cheat on their official production quotas and pump more than they say they do.

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