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Economics – Markets – Strategy
Asian oil demand drives global oil demand
Over the past five years, global oil consumption has grown by about 1.9% per
year. That’s significantly faster than the 1.5% growth averaged between 1985
and 2002. Where has the extra demand come from?
Demand from the
US, Japan and
Europe has fallen
for three years.
Demand from Asia,
mostly China and
India, has more
than made up for it
Not the US. Or at least not much. Demand there is about 5% higher than in
2001 but that was a recession year. On a clear day, US oil demand continues to
grow by about 3/4% per year.
Neither from Japan. Demand there is 4% less than it was in 2001. Nor from
Europe. Demand in Germany, France and Italy is down 4% since 2001 too. It
has been falling in all four countries by about 1% per year since 1996 (charts
below).
So where has the new demand come from? Asia, mostly. Since 2001, Asia’s oil
consumption has grown by some 1.3 trillion barrels, or 48% of the worldwide
total (table next page). China and India account for about 60% of the growth
in Asia.
But a lot of smaller Asian countries have contributed to global consumption
growth too. After China and India, Thailand is key with a 3% contribution to
the total. Indonesia’s oil consumption growth (3% per year) turned that country
from a net exporter into a net importer in 2003. Demand growth there accounted
for another 2% of the global rise between 2001-2006. Singapore, Vietnam,
Taiwan and Korea all contributed significantly. Given their size, this means
they are all punching far outside their weight (table at side).
These numbers are big but they are averages over a five year period, which
obscures much of the trend. By 2006, China and India were accounting for
nearly 2/3rds of the global increase in petrol consumption. Other Asian countries
had cut their consumption modestly but Asia’s contribution to the global total
had still grown to 60% (see Appendix A2).
Asia is driving the growth in global oil demand. But the real story may be this:
Asia’s consumption now (2006) accounts for 20% of the global total. And when
you put its high growth rate (8% for China and 5% for Asia overall) in consumption
demand on that bigger base, it starts to make a big difference to global totals
very quickly.
The bottom line is this: either Asia’s oil demand growth slows significantly or
global demand growth accelerates even more than it already has over the past
five years. Whether production / supply could keep up with that acceleration in
Global petroleum consumption
bbls/ year, 2001=100
140
135
130
125
120
115
110
105
100
95
90
01 02 03 04 05 06
CH, IN: 140
Asia 9: 111
US:
JP, EZ: 96
Global petroleum consumption
bbls/ year, 1992=100
210
200
190
180
170
160
150
140
130
120
110
100
90
80
92 94 96 98 00 02 04 06
CH:
206
Asia ex-
CH, IN:
168
US:
120
JP, EZ:
94
14