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Global Energy Demand in 2018 Grew at the Fastest Pace This Decade

Despite weakening growth in GDP and strengthening energy prices in 2018, global energy demand last year rose at its fastest pace since 2010, according to BP’s 2019 Statistical Review of World Energy. China, India, and the US were responsible for two-thirds of the 2.9% increase in consumption, BP Group Chief Economist Spencer Dale said in releasing the report. The widely followed annual statistical review said that demand growth pervaded all fuels, most of which grew more strongly than their historical averages.

Natural Gas Leads the Way

Both consumption and production of natural gas grew more than 5%—one of its strongest growth rates in more than 30 years—making up almost 45% of the entire growth in global energy consumption.

 

The US accounted for almost 40% of global natural gas demand growth and over 45% of the increase in production. Gas output increased by 86 Bcm—almost 12%—driven by shale plays in the Marcellus, Haynesville, and Permian basins. Although some of the increase was used to feed three new US LNG trains that came on stream last year, Dale said the majority was used to quench the thirst of domestic demand. US gas consumption increased by 78 Bcm—roughly the same growth as the country achieved over the previous six years. Outside the US, gas demand was concentrated primarily across China (43 Bcm), Russia (23 Bcm), and Iran (16 Bcm), which together with the US, accounted for 80% of global growth.

Global LNG supplies continued their rapid expansion last year, increasing by almost 10% as a number of new liquefaction plants in Australia, the US, and Russia were started or ramped up. For much of the year, Asian demand for gas was sufficient to absorb the increasing supplies. But lower Asian demand toward the end of the year and a mini-surge in LNG exports drove prices down. With continued price declines during the first part of this year, rapid increases in supplies could curtail some LNG capacity going forward.

The Oil Roller Coaster

Last year was a rollercoaster for oil markets, with prices starting the year on a steady upward trend and reaching $85/bbl in October before plunging to close to $50/bbl at year end. World demand increased 1.4 million B/D, with growth dominated by the developing world. China and India accounted for almost two-thirds of the global increase. The importance of petrochemicals in driving oil demand increased, as evidenced in the global product breakdown, with products most closely related to petrochemicals (ethane, LPG, and naphtha) accounting for approximately half of the overall growth in demand.

On the supply side, global production growth of 2.2 million B/D more than doubled its historical average. The vast majority of this growth was driven by US production. OPEC production fell in 2018 by 0.3 million B/D, with a marked increase in Saudi Arabian production (0.4 million B/D) offset by falls in Venezuela and Iran.

  • Last year, for the first time, temperature fluctuations increased the world’s use of fossil fuels. The recorded temperature swings—days that are much hotter or colder than normal—heightened demand for space heating and cooling, and with it, helped drive the world’s biggest jump in gas consumption in more than 30 years. In the US alone, the combined number of 2018 heating and cooling days was its highest since the 1950s.

  • The ongoing energy revolution in the US has created a juggernaut. The country achieved a double-first in 2018, recording the single-largest-ever annual increases by any country in both oil and gas production—most coming from onshore shale plays. Those record increases were not just for the US, but for any country in the 68 years of the BP Statistical Review.

  • Coal consumption (+1.4%) and production (+4.3%) grew in 2018 for the second consecutive year following three years of declines.

  • Renewable energy grew 14.5%, remaining the world’s fastest-growing energy source. In the last 20 years, three-quarters of the countries tracked by BP have adopted some form of renewable energy for power generation, with wind and solar leading.

  • Carbon emissions from energy use grew by 2%, the fastest expansion in many years.

  • The power sector is the single-largest source of carbon emissions within the energy system, and it is where much of the lowest-hanging fruit will lie for reducing carbon emissions over the next 20 years.

For the full report, go to  www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html

Global Energy Demand in 2018 Grew at the Fastest Pace This Decade

Judy Feder, Technology Editor

11 June 2019

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