Volume 2, issue #19 - 14-07-1997

June 21, 1997 Global energy demand grew by 3 % in 1996, the highest rate seen since 1988 according to the British Petroleum annual statistical report. It said growth in energy demand was more than double the average growth rate of 1.4 % for the period 1988-96. Last year was "an exceptionally strong year for energy consumption, primarily due to an upturn in the economic cycle and unusually cold weather in the Northern Hemisphere," the report noted. Energy consumption in the former Soviet Union (FSU) fell by 2.5 % last year, continuing the marked slowing in its declining demand. This was the smallest fall in energy consumption in the FSU seen since 1990, however.
The report did not expect such buoyant demand to last long, and not in the current year because steadily rising energy supplies were continuing to outstrip demand. World energy markets had already largely corrected and returned to longer term trends in growth, the review said. Demand for oil in the emerging economies continued to be strong, but followed existing long-term trends also.
Oil production, meanwhile, rose by 2.9 % in 1996. Over half the increase in demand was met by non-OPEC production, which expanded by 3.8 % to 34.3 million bpd. Production of oil in the United States stabilised, falling by just 0.3 %, due to increasing output from the deep-water fields in the gulf of Mexico. Production of oil in the FSU was also stable, falling by just 0.5 %. OPEC production, according to BP's estimates, rose by 2.8 % to 28.2 million bpd. One of the other notable features of 1996 was the exceptionally high oil price, BP said. The review estimated the average oil price of last year at $20.81 a barrel, nearly 4 dollars higher than the current value of North Sea Brent crude. Increased demand, due to the cold winter, combined with low stocks, drove prices to a peak of over $ 24 a barrel, but prices have eased as stocks have been rebuilt.
Last year was also a period of exceptionally strong demand for gas, the review said. Global demand for natural gasrose by 4.7 %, helped largely by two factors. Demand in the FSU rose by 0.7 % after four years of decline. Demand was also very strong in Europe (up by 10.7 %) and in South and Central America (up by 10 %). A 17.3 % growth in the United Kingdom for gas demand meant it overtook Germany to become the largest gas consumer in Europe and the third-largest in the world.This highlights the importance of the Interconnector, which will allow gas exporters to target the UK market for sales.
Gas prices were very high last year, driven by the cold winter and low stocks, as in the case of oil. Production rose to meet demand, rising by 4.9 % during the year with particularly high rises in Norway, up 31.4 % and the UK up 19 %.
Demand for coal rose by 2.3 %. Outside the FSU, demand rose by 3.1 %, more than double the average in the past 10 years. Demand for coal in the U.S. was strong because of the cold winter, plus high gas and oil prices. Use in Europe fell again, however.
Use of nuclear power expanded by 3.9 %in 1996 and while this is a sector which continues to grow, it is on a long-term declining trend and is confined to a few countries who strongly favour nuclear power.
Hydroelectric power use grew by only 0.8 % in 1996, mainly due to adverse dry conditions in northern Europe and Scandinavia.