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IEA sees stronger global oil demand

Posted on June 10, 2010 by bp complaints

IEA sees stronger global oil demand
The International Energy Agency said Thursday it has raised its forecasts for global oil demand for 2010, citing stronger than expected economic activity in developed economies.
Read more on AP via Yahoo! Finance


0 to “IEA sees stronger global oil demand”

  1. posconvex says:

    Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand:
    – China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year over the next 30 years
    – No peak in global production

    In next 10 years we must find 44 million BOPD:
    – 26 million BOPD to maintain supply – 30% of current production, almost 3 times Saudi Arabia’s output
    – 18 million BOPD to keep up with demand – 22% of current production, almost 2 times Saudi Arabia’s output

    If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
    – Oil demand elasticity of -0.3
    – Current production 84 million BOPD, current price US$ 80
    – Peak production 100 million BOPD
    – Post peak decline rate of 3-4%

    If you want to try the model for yourself using your own assumptions it can be found at Petrocapita: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86

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