World energy consumption rose sharply in 2010, BP official tells Baker Institute audience

BY FRANZ BROTZEN
Rice News staff

Worldwide energy consumption rose by 5.6 percent in 2010, an energy economist with the British oil giant BP told an audience at the James A. Baker III Institute for Public Policy June 21. It was a significant increase over 2009, he said, and an indication that the global economy has rebounded from the recession.

	MICHAEL STRAVATO
	Worldwide energy consumption rose by 5.6 percent in 2010, said Mark Finley, an energy economist with the British oil giant BP.

Historical data demonstrate that “energy consumption is significantly affected by downturns and recoveries,” said Mark Finley, BP’s America’s general manager for global energy markets. The 2010 rate was the largest increase in percentage terms since 1973.

The growth in energy consumption, however, was not evenly distributed around the world, he said. Countries in the Organisation for Economic Cooperation and Development (OECD), for instance, saw their consumption rise by only 3.5 percent, while non-OECD countries increased their consumption by 7.5 percent. China, which registered an 11.2 percent increase in energy consumption in 2010, passed the United States as the world’s largest energy consumer.

Finley’s figures came from the 60th annual BP Statistical Review of World Energy, which is published every June.

“Last year we had a unique circumstance of a very strong energy demand growth driven by robust economic growth, recovery from recession and taking into account the shifting weight of economic activity and energy consumption in the world,” Finley said. Some of those developments are cyclical, he continued, but the shift in economic power to the developing world is a structural phenomenon that will be present for a long time.

The BP report went into greater detail on the energy markets. Oil remains the world’s leading source of energy; use of oil rose 3.1 percent in 2010 and accounted for 33.6 percent of global energy consumption. Still, 33.6 percent represents a continuing slide in oil’s share of the energy market — a slide that began 11 years ago.

Finley pointed to oil’s high price to explain its falling importance relative to other fuels. “The pace at which oil loses market share matches up very well with the oil price,” he said. “When oil prices are exceptionally high, the erosion of oil’s market share is rapid.”

Coal, on the other hand, is quickly gaining market share, up to 29.6 of global energy consumption in 2010, the BP report found. That is coal’s highest share of the market since 1970, and up from 25.6 percent in 2000. China’s heavy use of coal played a significant role, but the report emphasized that other regions of the world also increased their consumption of coal.

The world also consumed more natural gas in 2010, up 7.4 percent from the previous year. Thanks in large part to shale gas, the United States passed Russia as the leading producer of natural gas, Finley said.

The consumption of renewable energy tripled over the last decade, but made up only 1.8 percent of global consumption in 2010.

In her welcoming remarks, Amy Jaffe, the Wallace S. Wilson Fellow in Energy Studies at the Baker Institute, warned that the current unrest in several Middle Eastern nations could affect global energy production. Even disruptions in smaller producers, like Egypt, Syria and Yemen, could cause a contagion effect that sparks a long-term rise in prices.

The BP annual review is available online at http://www.bp.com/sectionbodycopy.do?categoryId=7500&contentId=7068481.