14 June 2006 17:41 [Source: ICIS news]
The good news is that energy market adjustments are beginning.
Energy markets are volatile this year not because of supply/demand fundamentals but due to shifting demand patterns and rising geopolitical tensions. Underlying energy statistics have acquired new life and certainly raise more than passing interest among industrialists and even the energy consuming public.
BP said on Wednesday that world energy demand growth slowed in 2005 to 2.7%, closer to the 10-year average and away from the 4.4% increase seen in 2004 which was the steepest in 20 years. Last year, demand slowed in every region and for every fuel despite being driven further by above trend economic growth.
The energy complex coped admirably with the crippling impact of the two major hurricanes that hit the ?xml:namespace>
Markets are adjusting, however, and Davies suggested this will continue.
“There has been a price effect already with coal and gas prices falling and oil consumption growth slowing sharply and inventories rising,” he said.
This dramatic period for the energy sector produced in 2005 the third consecutive year of higher energy prices, according to the BP data. Brent crude rose by more than 40% over the course of the year and pushed over $60/bbl in August. It averaged $45/bbl for the year.
The oil price increase highlighted the limited ability of the world refining system to refine heavy sour crude which were often sold at steep discounts to the lighter grades traded on the NYMEX and IPE futures markets. Against the backdrop of higher priced oil attention turned to gas and alternative energy sources like coal.
The energy statistics are revealing but also hide some of the truth behind the headlines. Energy consumption in the
The hurricanes were largely to blame – the decline in oil consumption was concentrated in the last four months of the year. But high prices also clearly took their toll of demand. High and volatile gas prices hit industrial users in countries like the
Not surprisingly, alternative energy sources and renewables are taking a larger slice of the energy pie.
Installed wind power capacity was 28.6% higher in 2005, for instance, but was used to generate only an estimated 0.7% of worldwide electricity. Global ethanol production rose by 10% in 2005 reaching 16m tonnes of oil equivalent or about 0.4% of world oil consumption, BP said.
Despite the relatively small impact, the rates of growth are noteworthy. If oil prices remain high then the world will seek out lower cost alternatives. The drive for greater energy sustainability will continue. The dry statistics reveal a great deal and emphasise the winds of change.
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections