Disruptions to supply and ever-increasing demand are the two main energy stories of 2011, according to the BP Statistical Review of World Energy 2012.
The Arab Spring affected oil and gas supplies, most notably the complete—albeit temporary—loss of Libyan supply. Meanwhile, the Fukushima nuclear incident in Japan produced ripple effects for nuclear and other energy sources around the world. These shocks pushed energy prices higher in much of the world, with oil prices reaching a record average of more than $100/bbl for the first time in history.
Despite these and other occurrences, including the largest increase in oil production from the Organization of Petroleum Exporting Countries and the first release of strategic petroleum reserves since 2005, nothing in the aggregate data for 2011 indicates anything out of the ordinary, said Christof Ruhl, BP chief economist.
In fact, Ruhl noted, both worldwide gross domestic product and energy consumption growth last year landed right at their long-term averages. What made the system work were fuel substitution, supply and demand responses, and trading patterns, he said.
“An increase in oil supplies, most notably from Saudi Arabia, together with flexibility in trading and the global refining system, allowed heavier Saudi crudes to replace lighter Libyan oil in Europe; a diversion of natural gas from Europe to Asia allowed the substitution of lost nuclear energy in Japan without harming the energy needs of other economies in the region; and the release of coal from the US, facilitated by the availability of unconventional gas, helped to replace gas in Europe,” Ruhl said.
BP reported that global energy consumption increased by 2.5% in 2011, broadly in line with the historical average but well below the 5.1% seen in 2010. Emerging economies accounted for all of the net growth, with demand among the industrialized countries of the Organization for Economic Cooperation and Development falling for the third time in the last 4 years, led by a sharp decline in Japan. China alone accounted for 71% of energy consumption growth last year.
Fossil fuels still dominate energy consumption with 87% market share, while renewables rose fastest but are still only 2% of the global total, the report said.
The fossil fuel mix continues to change with oil—the world’s leading fuel at 33.1% of global energy use—losing share for 12 consecutive years. Oil consumption reached 88 million b/d, posting a below-average rise of 0.7%.
Worldwide natural gas consumption grew by 2.2% last year. This was below average in all regions except North America, where low prices due to the shale gas revolution drove robust growth, BP said. There was a record decline in EU gas consumption, down 9.9%, driven by the weak economy, high prices, warm weather, and continued growth in renewable power generation.