World Oil Demand Growth at 21-Year High

Washington Post
Reuters
Thursday, June 10, 2004; 4:25 AM

LONDON (Reuters) - Economic expansion is fueling the biggest increase in world oil demand for 23 years, fired by accelerating growth in China, the International Energy Agency (IEA) said on Thursday.

In its monthly Oil Market Report, the agency raised its projection for incremental oil demand in 2004 by 360,000 barrels a day to 2.3 million, or 2.9 percent, on the 81.1 million bpd world market.

It said demand had proved stronger than expected in North America, Brazil and India, despite high oil prices.

The agency welcomed last week's decision by the Organization of the Petroleum Exporting Countries to raise oil output, saying that economic growth could not be sustained for the long term at high prices.

"While the pace of economic growth remains strong, it has been driven by a number of one-off factors," said the IEA, adviser on energy to 26 industrialized nations.

It cited low interest rate policies, tax cuts, major infrastructure projects in China, depleted industrial inventories and expenditures associated with the war on terror.

"In this respect, price effects have been overwhelmed by wealth effects," it said.

China continues to provide the lion's share of world oil demand growth.

The IEA said it expects year-on-year Chinese growth of 1.2 million bpd, 23 percent, in the second quarter, accelerating from growth of one million bpd or 19 percent in the first quarter.

But it is forecasting growth in China will slow to 8.2 percent in the second half of 2004.

It said China's imports of crude and petroleum products hit a record 3.391 million bpd in April, up 744,000 bpd from March and 1.438 million bpd higher than in April last year.

© 2004 Reuters

[Read and despair. We know global oil reserves, and production rates, are at a peak. We know the global warming consequences of continuing, not to mention accelerated, use of fossil fuels. We are in the middle of an ongoing saga of global oil politics, violence and tragedy in Afghanistan and Iraq. We have alternatives - conservation, efficiencies, and sustainable generation technologies - that we could move to. And we chose not to. Except, perhaps, at the local level, where the benefits to the environment, local economies, and people are immediate and meaningful. If the required energy pardigm shift is going to take place, it will happen at the local level, with global impact. If.]