Global Oil Consumption Report Card – Grave or Trivial?

Global Oil consumption in the last decade is characterized by a sinusoidal wave, wherein we saw many factors elevating the prices and some factors dramatically having the opposite effect. From a $156.62 in June 2008 to $29.41 in January 2016, Oil prices don’t seem to amaze us with its variations.

The world has witnessed many events which have had a significant impact on world economies, for instance, US’s oil bloom, and India’s HELP, a step to enhance participation in E&P. The global canvas of Oil’s production and consumption is extremely hard to predict.

BP Statistical report for the year 2014 suggested possible changes in the oil consumption, according to it the time period between 2008-2013 has led to a rise in production and consumption by Middle East, Asia Pacific and African countries while in US and Europe it showed a decline.

A Global Outlook

World oil production barely increased from 2005-2016 but Oil consumption kept on increasing. This pattern can be explained by a reduction in the consumption by US and Japan, as US became virtually independent by Shale gas and Japan has energy alternatives. Thus, it helped India and China to be the top consumers among the emerging economies. EIA reported that the sudden fall in prices is because of the Shale phenomenon, however, due to its poor up keeping with production the prices rebounded, however, it didn’t affect much in consumption. It is on a continuous rise.

Read our exclusive study, Asia’s Henry Hub

India’s oil report-card

The Ministry of Oil and Petroleum of the Government of India recorded growth in consumption in the year 2016’s first quarter to be the fastest in the past decade. As one of the strongest emerging economies, there’s a lot to unfold in the upcoming decade. However, the lessons from the past are learned as well as the introduction of new policies and regulations have given a boost to India’s energy outlook.

It was very interesting to observe last year when India bombshell the world by leaving behind Japan in oil consumption. Japan hit an all-time low of 4, 297, 000 barrels per day in the year 2014 and didn’t pick up from this trough which became the dress rehearsal for its early exit from the top-3 most oil-consuming nations of the world in 2016.BP statistical survey indicated the Oil consumption’s (in million tonnes) overall growth per annum in the year 2016 of all the competing countries. In it, it is clearly visible that India is growing at 4.8% per annum against Japan’s 4.2% per annum which is responsible for the smooth overtake by India.

And now economic-pundits claims that India would lead the oil consumption and surpass its competitor, China by 2035.

Also, the current Government has made it a point to revamp the shape of Oil exploration, production and consumption by changing the traditional approach altogether which will couple the growth further in upcoming years.

Technology’s role is detrimental

New technologies and digital transformation in exploration is a promising one. Technologies such as next-generation EOR (Enhanced Oil Recovery), seismic imaging, & well construction & intervention could increase recovery of Oil and Gas up by 35% by 2050. Seismic subsurface imaging and drilling facilities can help reduce the cost of extraction and supply by almost 25% by 2050.

Read how laser drilling technology is changing exploration in the oil and gas industry

What is the future face of consumption?

It is well-understood fact that Oil has no significant substitute. It will continue to drive the industries and economies of the world. Resilient efforts by US’s shale gas don’t seem to have much effect on the global oil prices which will assume a hike because of its irreplaceability as a source of economic growth.

With the US signaling an attempt to lower fuel consumption by becoming a net exporter by 2022 and France to ban petrol and diesel cars by 2040, we might assume a net decline in overall consumption. However, with countries like China and India, showing a concrete growth in consumption with every passing year, it is possible that they out balance the former decline, leaving us with yet another speculation for the future of our industry.