Cambridge Energy Research Associates believe oil demand, which has fallen away with the financial crisis, will return to 2007 levels by 2012. Significantly, they point out, this is a much faster turnaround than the last time oil demand fell, in the 1980s.
Oil demand began to decline at the end of the 1970s, from 64.1m b/d in 1979 to 61.6m b/d in 1980, according to the BP statistical review. It wasn’t until 1988 that it recovered to 1979 levels.
Now, IHS CERA says, it will recover by 2012 – and unsurprisingly, much of that is down to China and other non-OECD countries. From the CERA press release:
Overall, emerging markets will drive the recovery of oil demand. IHS CERA expects oil demand to increase from 83.8 mbd in 2009 to 89.1 mbd in 2014. 83 percent (4.4 mbd) will come from non-OECD countries. China alone is expected to account for 1.6 mbd of cumulative growth. Just 900,000 bpd of growth is expected to come from OECD countries.
The not so great news, from an environmental point of view, is that they say the recovery in oil demand will be faster this time because there are fewer options for substituting. In the 1980s, according to the report, power generation accounted for the largest part of the fall; and substitution with coal, gas and nuclear was what kept oil demand suppressed. This time, new demand will come largely from transport – all those new cars in Asia. And that means substituting – whether with other polluting fuels such as coal, or with renewable energy – looks more tricky, at least within the next few years.
However IHS CERA global oil managing director, Jim Burkhard, was not ruling out transformative changes:
“While our base case suggests that 2012 will be the year that global oil demand recovers to 2007 levels, we continue to research the alternative scenarios that could alter the balance in the oil market,” said Burkhard.