While the global economic slowdown has impacted nearly every corner of the investable universe, one commodity group that has been hit particularly hard has been energy. Oil, gas, coal, and even nuclear power have all fallen victim to sluggish economic growth and dwindling global demand. And in its annual energy report, BP takes a closer look at how exactly the global recession has impacted the supply and demand of some of the most widely-traded commodities on the market [for more energy news and analysis subscribe to our free newsletter].
U.S. Pumps Out More Oil, But Global Demand Dwindles
BP reported that global energy consumption grew by only 1.8% in 2012, well below the 10-year average of 2.6% and lower than 2011′s 2.4% figure. From the emerging market economies, which typically drive the most demand, only China and India saw increased consumption; together, the demand from these countries accounted for almost 90% of the global increase. In the U.S., energy demand fell 2.8%.
From the supply side, however, the U.S. saw its biggest-ever annual increase in oil production. According to the report, the U.S. produced 8.9 million barrels of oil a day. BP cites “unconventional” oil as the main reason behind the surge, as controversial techniques of fracking and horizontal drilling have made reserves more accessible [see The Case Against Fracking].
In other energy commodities, BP reported on several noteworthy trends:
- Renewable Energy: Biofuel production contracted 0.4% in 2012, marking its first decline in over a decade. Solar power generation, however, skyrocketed last year, increasing more than 58%. Wind energy also saw an uptick in 2012, with generating capacity growing by 18.9% [see Japanese Government Policy Sets Solar On Fire].
- Coal: In 2012, the world’s proved reserves of coal were sufficient to meet over 100 years of global production. Over the last year, production increased by 2% globally. Asia pacific economies accounted for all the net increases, with China’s and Indonesia’s production growing by 3.5% and 9%. U.S. production, however, declined 7.5%. Globally, coal consumption increased 2.5%, well below the 10-year 4.4% average.
- Natural Gas: World proved reserves came in at 187.3 trillion cubic metres, a 0.3% decline from last year’s number. Global natural gas production increased 1.9%, though U.S. production increased by 4.7%. Overall, consumption of the fossil fuel increased 2.2% [see Natural Gas Taking A Major Hit].
- Nuclear Power: Nuclear power generation took the biggest hit last year, declining 6.9% – the largest decline on record for a second consecutive year. Nuclear’s share of global primary energy was the lowest in nearly 30 years.
Disclosure: No positions at time of writing