![]() However, following the subsequent rise in oil prices and the consumers’ quest for greater security of supply, oil’s share in power generation dropped to less than 3 percent by 2019, as it was crowded out by other fuels, primarily natural gas, renewable and nuclear energy. ![]() ![]() For example, in 1973, just before the first oil shock when Arab countries in OPEC curtailed their supplies in retaliation for Western support for Israel in its war against Egypt, oil accounted for 25 percent of world electricity generation. The main driver has been technology as well as the globalization of markets, which enables a faster diffusion of technical innovation.Ī combination of oil price shocks and policy has encouraged the substitution of oil with other fuels. Oil has become a lot less important, and humanity has become more efficient in making use of it, the authors concluded. By 2019, global oil intensity was 0.43 of a barrel per $1,000 of global GDP – a 56 percent decline. In 1973, for example, when oil intensity was at its zenith, the world used a little less than one barrel of oil to produce $1,000 worth of gross domestic product (GDP). The key triggers behind these trends are primarily efficiency improvements, policy, interfuel substitution, slower population growth and, increasingly, the electrification of the transport sector.Ī recently published report by Columbia University finds that the world’s oil intensity – the volume of oil needed to produce a fixed economic output, which is a broad measure of efficiency – has been constantly declining in a linear trend since 1984. Between 20, almost all the growth in global oil demand was driven by the developing world, with Asia expected to continue to be the growth center in the coming years. What has been driving the growth in global demand is the developing world, primarily Asia (mainly China and India – the second- and third-largest oil consumers in the world after the United States) and the Middle East (led by Saudi Arabia, which is also the sixth-largest consumer in the world). Second, in the OECD countries, oil demand peaked in 2005 at around 50 million barrels per day (mb/d). Since 2013, however, the demand for oil in the non-OECD countries (or the developing economies) has exceeded that of the developed world and in 2019 it accounted for 54 percent of global oil consumption. Today they are desperately looking for oil tomorrow they will be in a much stronger position.įirst, for decades, oil demand was concentrated in the developed world – the 38 members of the Organisation for Economic Co-operation and Development (OECD) – which accounted for around 75 percent of total oil consumption in 1965. ![]() Market power will shift toward consumers. For instance, in 2019, each day, the world consumed more than three times the number of oil barrels than it did in 1965. Although its share peaked in the mid-1970s, when it accounted for almost half of the world’s energy consumption, its demand continues to grow in absolute terms. Oil has dominated the world’s primary energy mix for nearly six decades. Today they are desperately looking for oil tomorrow they will be in a much stronger position. In such a world, market power will shift toward consumers. In a shrinking market, for one country to increase production, supply from another country is squeezed out, usually done by price competition. In a growing market, there is space for everyone. A relatively new question is increasingly considered in these assessments, namely when oil consumption will peak in the world.Īfter peak oil demand is reached, it will at some point plateau and then shrink. Typically, investors analyze how the market and particularly oil demand will look many years ahead because of the long-term nature of oil projects. It has not so far (except for the hit it took during the height of the Covid-19 pandemic). ![]() This reluctance to invest was partially driven by expectations that oil demand growth would slow. The world is scrambling to find new oil supplies because of inadequate investment over the last few years. Forecasts vary, but worldwide oil consumption is expected to peak in 20 years.However, driven by Asia, global demand for oil continues to rise in absolute terms.Oil is used more efficiently today while its share of energy consumption has dropped. ![]()
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