9-Sep-09 6:00 AM  CST  

Report sees rebound in global oil demand 

Global oil demand will resume its climb next year and should be back to 2007's highs by 2012, IHS-Cambridge Energy Research Associates reported Tuesday.

The recovery will come more quickly than after the last major oil bust in 1980 — when demand took a decade to reach its 1979 level — because developing nations like China and India are still primed for growth, said Jim Burkhard, managing director of global oil research for the firm.

Growing populations in those countries continue to become more affluent, as shown by projections that new-car sales in China will top U.S. sales this year.

“What's changed in a generation is the regional composition in demand growth,” Burkhard said.

But once demand for oil tops the old record, it will grow more slowly than it did before the recession, thanks to flat or even declining demand in the developed nations.

U.S. gasoline consumption is unlikely ever to top its 2007 peak, Burkhard said, because of laws requiring more ethanol in gasoline and tougher fuel economy standards.

In Europe, a shift to diesel-powered cars and light-duty trucks has also led to recent drops in oil demand. Aging populations in Europe and Japan also use less fuel.

On Tuesday benchmark crude rose $3.08, or 4.5 percent, to $71.10 per barrel on the New York Mercantile Exchange. Analysts credited a falling dollar for pushing investors to seek out commodities such as oil and gold as a hedge.

Oil demand reached 86.5  million barrels per day in 2007 but has since plummeted with the global recession, with 2009's estimated demand expected to come in around 83.8 million barrels.

CERA predicts 2010 demand will grow by 900,000 barrels to 84.6 million barrels.

By 2012, demand should reach 86.9 million barrels and by 2014 estimates grow to 88.9 million barrels.

The recovery from the 1980s' oil demand crash took 10 years because prices remained high and consumers found substitutes for oil.

“In the 1980s, the largest area of demand decline came from power generation, where oil was replaced by readily available substitutes like coal, gas or nuclear,” Burkhard said.

“Today, global demand growth comes from the transportation sector in emerging markets where there are fewer options for switching fuels.”

There are signs that the combination of fossil fuels and electricity — such as powers the growing number of gasoline-electric hybrid cars on the roads — will counter oil demand, but widespread acceptance is still a number of years off, Burkhard said.

 

For additional information on this Industry news article, please contact:

Tom Fowler

Source: Houston Chronicle
http://www.chron.com

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