Reviewing Global Crude Oil Consumption
According to the BP Statistical Energy Review, global crude oil consumption increased by a fraction under 1 million barrels per day (mbpd) during 2007 to 85.22 mbpd.
The growth in demand for oil from the emerging economies is reflected in the data produced in the BP review and points to a continuation of the very tight balance between supply and demand for crude oil.
China (4.1%) and the Middle Eastern countries (4.4%) contributed the most to the increased crude oil consumption in 2007 compared to 2006.
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In the case of China this is not surprising given the breakneck rates of growth witnessed as the economy surges ahead, putting China as the fastest growing economy in the world. With annual growth rates of over 9% more the rule than the exception, China has become the second largest consumer of oil (after the USA), importing more than a third of its needs.
It is the number one consumer of copper and steel, with its consumption of steel greater than that of the USA and Japan combined.
These growth rates in natural resource demand are unlikely to tail off in the short to medium term.
Asia Pacific represents 30% of total global crude oil consumption and China (including Hong Kong) contributes 9.7% (almost a third) of that figure.
Only Japan (3rd largest oil global consumer) comes near consuming 5.051 mbpd.
China has shown its concern over securing stable supplies of crude oil and other resources with its foray into a number of African states, as well as signing long term contracts with Middle Eastern producers like Iran.
Asia Pacific Demand
Within the 30% which represents Asia Pacific consumption in the global total, after China the only significant consumers are Japan (5.051 mbpd), India (2.748mbpd) and South Korea (2.371mbpd).
With China and India predicted to continue high annual growth rates, these two countries are likely to dominate the Asia Pacific contribution for the foreseeable future.
This was part of the consensus achieved at the Jeddah Oil Conference in Saudi Arabia between producers, consumers and energy ministers.
North America
At 20.698 mbpd in 2007, the US is still by some way the largest consumer of oil in the world, and the price of light sweet crude oil futures on NYMEX is a reliable barometer of the impact of crude prices on the American economy.
Unleaded gasoline demand remains steady despite the higher crude prices but if we approached $150 and then higher, there would be a profound impact on the US economy.
At these levels the cude oil price is acting as an incentive for developers and manufacturers to scale up production of automobiles powered by alternative energy sources.
Of the 28.7% North American share of global oil demand, the US takes 23.9% which dwarfs the 2.024 mbpd (2.3%) consumed by its neighbour Canada.
Given the latter’s vast deposits of oil sands, giving it the second highest reserves in the world after Saudi Arabia, it is likely the US will switch to higher reliance on Canadian oil imports in the medium to long term.
The Middle Eastern countries, most of whom are members of OPEC, recorded an increase in consumption of 4.4% to 6.203 mbpd in 2007 over the 2006 level.
The biggest consumer of oil was Saudi Arabia at 2.154 mbpd followed by Iran (1.621 mbpd).These two countries are the top two producers of crude in the world yet despite this we have witnessed surging prices.
A significant factor in crude oil consumption is that most of this oil is sour crude which needs special refining capacity to process it for the in-demand gasoline and other distillate products.
Gasoline in the Middle Eastern states is subsidised and so the consumption patterns of their populations have not been impacted in the same way as those of the net consuming nations.
Looking Forward
As with other commodities, high oil prices are having an adverse impact on all economies but particularly those where subsidies are not provided on consumption of oil and its derivatives.
It seems that the best way of moderating current crude prices is by a combination of using alternative fuel sources and an increased refining capacity for heavy sour crudes which will in time increase the supply of refined petroleum products.
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