Oil demand is making a comeback as the global economy begins to heal, but don’t count on developed nations like the U.S. and Europe to reach their past highs of oil use, says a new report by IHS Cambridge Energy Research Associates.
Oil demand in developed countries–currently 54 percent of all oil demand–likely reached its all-time peak in 2005, the report notes. It makes sense it would be down with the recession, but the economic downturn has been masking a larger trend: “The fact is that OECD oil demand has been falling since late 2005, well before the Great Recession began,” said IHS CERA Chairman Daniel Yergin.
The key to the dampened demand from the developed countries is the use of oil for transportation –which accounts for 60 percent of OECD petroleum demand–is likely to flatten out after years of steady growth, the study says.
Why is that, you ask?
• Vehicle ownership rates in developed countries have reached a “saturation” level while aging populations means a “flattening of demand for mobility.”
• The growth of women’s participation in the labor force is also leveling off, meaning the flattening of another source of demand growth.
• Stronger governmental and consumer push for better vehicle fuel economy gains driven by higher energy prices in recent years and concerns over energy independence.
• More alternative fuels and vehicle technologies, including biofuels and plug-in hybrid electric vehicles.