Energy Major Warns of Falling Fossil Fuel Demand

It’s considered by the energy market as one of the most authoritative analyses of the global energy business. BP’s annual statistical review of world energy is crammed full of statistics and comments – much of it difficult reading for a company focused on oil and gas production.

In 2016, energy consumption worldwide grew by less than 1% – following on from growth of only 0.9% in 2015 and 1% the previous year.

“The relentless drive to improve efficiency is causing global energy consumption overall to decelerate”, says Bob Dudley, BP’s chief executive.

“And of course the energy mix is shifting towards cleaner, lower carbon fuels, driven by environmental needs and technical advances.”

Low-priced oil
The price of oil – the leading source of global energy, accounting for about a third of overall energy consumption – remains low, averaging US$43 a barrel in 2016 compared with highs of more than $120 a barrel less than 10 years ago.

There continues to be an excess of oil supplies:  various production cutbacks by the big oil-producing countries have so far done little to bolster prices.  World gas output saw its weakest growth for more than 30 years, says BP.   And the mining and burning of coal accounts for about 25% of the climate-changing greenhouse gases being emitted into the atmosphere. 

BP says that of all the fossil fuels, coal has seen the biggest fall-off in demand.  In China – both the world’s biggest producer and consumer of coal – production fell by nearly 8% last year, the biggest drop on record.

President Trump has made the revival of the coal sector one of the key objectives of US energy policy.

BP says the reverse seems to be happening:  US coal production fell by 19% in 2016.

“It feels to me like we’re seeing a decisive break with coal, relative to the past”, says Spencer Dale, BP’s chief economist.  “I think the big story here is coal getting squeezed.”

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