25 June 2012 00:00 [Source: ICB]
The world is not structurally short of hydrocarbons, but tapping into the remaining reserves at a reasonable cost remains the challenge,BP stressed in its latest review of world energy.
Global markets reacted remarkably well last year to the Libyan crisis and the earthquake and tsunami in Japan. Saudi Arabia, the United Arab Emirates and Qatar, particularly, pumped more oil to help alleviate the shortfall from Libya. Gas moved from Europe to Asia, helping to mitigate the loss of nuclear power in the aftermath of theFukushima disaster. US coal, released because of the advent of of shale gas, helped replace gas in Europe.
Despite various ups and downs, energy statistics move in line with long-term trends Copyright: RexFeatures
Despite the roller-coaster ride, the energy statistics moved in accordance with long-term trends. Energy consumption globally was up 2.5%, which BP chief economist Christof Ruhl said was broadly in line with the historical average. "Emerging economies accounted for all of the net growth, with OECD [Organisation for Economic Co-Operation and Development] demand falling [by 0.8% in 2011] for the third time in the last four years, led by a sharp decline in Japan. China alone accounted for 71% of energy consumption growth," he added.
Underlying these broad trends however, it is not surprising to see that, in a weakened economic environment, oil demand grew by less than 1% while gas growth was 2.2%. Coal consumption grew at 5.4% globally and by 8.4% in the emerging economies. Oil's share of the energy mix has shrunk for the past 12 years and in 2011 it was 33.2% of total energy use, or 88m bbl/day. Coal accounted for 30.3% of global consumption.
The ability of the global energy markets to absorb shocks and adjust to compensate for them shows how important open markets are. "The ability of supply to meet demand at an affordable price depends on two things - markets and infrastructure," BP CEO Bob Dudley said. "The open market is something that governments provide - while the infrastructure is largely something industry provides."
Competition helps suppliers build infrastructure and develop the technology to exploit harder to reach hydrocarbons. "The good news today is that we're seeing a whole range of areas where this process of competition, innovation and growth is generating results," Dudley said. "As we have often said, the challenges lie more above the ground than beneath it."
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