EIA projects world liquid fuels use to rise 38% by 2040, driven by growth in Asia and Middle East; transportation 92% of demand
10 September 2014
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| Liquid fuels production (OPEC crude and lease condensate, non-OPEC crude and lease condensate, and other) and consumption (by OECD and non-OECD regions) under three price cases in 2040. Dashed red line shows 2010 consumption of 87 MMbbl/d. Source: EIA. Click to enlarge. |
World petroleum and other liquid fuels consumption will increase 38% by 2040, spurred by increased demand in the developing Asia and Middle East, according to the Reference Case projections in International Energy Outlook 2014 (IEO2014), released by the US Energy Information Administration (EIA). Those two regions combined will account for 85% of the total increase in liquid fuels used worldwide over that period, said EIA Administrator Adam Sieminski.
IEO2014 projections of future liquids balances include two broad categories: crude and lease condensate and other liquid fuels. Crude and lease condensate includes tight oil, shale oil, extra-heavy crude oil, field condensate, and bitumen (i.e., oil sands, either diluted or upgraded). Other liquids refer to natural gas plant liquids (NGPL), biofuels (including biomass-to-liquids [BTL]), gas-to-liquids (GTL), coal-to-liquids (CTL), kerogen (i.e., oil shale), and refinery gain.
World markets for petroleum and other liquid fuels have entered a period of dynamic change in both supply and demand, the EIA noted, leading to its reassessment of its outlook for long-term global liquid fuels markets in IEO2014. Some key IEO2014 findings:
World liquid fuels use is projected to grow from 87 million barrels per day (MMbbl/d) in 2010 to 119 MMbbl/d in 2040. The potential for growth in demand for liquid fuels is focused on the emerging economies of China, India, and the Middle East, while liquid fuels demand in the United States, Europe, and other regions with well-established oil markets seems to have peaked.
After a long period of sustained high oil prices, efficiency and fuel switching have reduced or slowed the growth of liquid fuels use among mature oil-consuming countries. Developing Asian countries (including China and India) account for 72% of the world increase in liquid fuels consumption, with Middle East consumers accounting for another 13%.
Rising prices for liquid fuels improve the cost competitiveness of other fuels, leading many users of liquid fuels outside the transportation and industrial sectors to switch to other sources of energy when possible. The transportation and industrial sectors account for 92% of global liquid fuels demand in 2040, whereas in every other end-use sector the consumption of liquid fuels decreases on a worldwide basis over the projection period.
Fast-paced economic expansion among the non-OECD regions drives the increase in demand for liquid fuels, as strong growth in income per capita raises demand for personal transportation and freight transport, as well as demand for energy in the industrial sector.
OECD liquid fuels consumption declines by 0.1% per year, as the mature economies react to sustained high fuel prices. Strong efficiency gains (especially in personal transportation) and conservation reduce OECD demand for liquid fuels. While technology efficiency improvements and fuel-switching opportunities are also available to non-OECD consumers, the sheer scale of growth in demand for transportation services in relatively underdeveloped transportation networks overwhelms the advantages of those improvements.
OPEC oil producers are the largest source of additional liquid fuel supply between 2010 and 2040. OPEC crude and lease condensate accounts for 14 MMbbl/d of the 33 MMbbl/d increase in total liquid fuel supply. The IEO2014 Reference case assumes OPEC producers invest in incremental production capacity that enables them to maintain a share of between 39% and 44% of total world liquid fuels production throughout the projection. The Middle East OPEC member countries alone account for 90% of the total growth in projected OPEC crude and lease condensate production.
Non-OPEC crude and lease condensate production increases by 10 MMbbl/d. Rising world oil prices attract investment in areas previously considered uneconomic. Potential new supplies of oil from tight and shale resources have raised optimism for large, new sources of global liquid supplies to meet growing demand.
Compared to previous reports, IEO2014 incorporates larger new supplies of tight oil from the United States and Canada. However, other countries, including Mexico, Russia, Argentina, and China, begin producing substantial volumes of tight oil between now and 2040.
Other IEO2014 highlights include:
Since July 2012, North Sea Brent crude oil spot prices have generally remained in the range of $100 to $115 (nominal dollars) per barrel. Supply disruptions in several oil-producing regions, notably in North Africa and the Middle East, have been largely offset by increasing liquids supplies from the United States and Canada. In the IEO2014 Reference case, oil prices are expected to increase over the long term, with the world oil price in real 2012 dollars reaching $141 per barrel in 2040.
Liquids other than crude and lease condensate—including natural gas plant liquids (NGPL), biofuels, coal-to-liquids (CTL), gas-to-liquids (GTL), kerogen (oil shale), and refinery gain—currently supply a relatively small portion of total world petroleum and other liquid fuels, accounting for about 14% of the total in 2010. However, they are expected to grow in importance, rising to 17% of total liquid fuels in 2040.
Rising prices for liquid fuels improve the cost competitiveness of other fuels, leading many users of liquid fuels outside the transportation and industrial sectors to switch to other sources of energy when possible. The transportation and industrial sectors account for 92% of global liquid fuels demand in 2040. Consumption of liquid fuels in the other sectors (residential, commercial, and electric power) decreases over the projection period.
In addition to the Reference case, the IEO2014 includes a low-oil-price scenario and a high-oil-price scenario with prices that reach $75 and $204 (real 2012 dollars) per barrel, respectively, in 2040. The price cases examine a range of potential interactions of supply, demand, and prices in world liquids markets.
EIA said that because the oil price paths represent market equilibrium between supply and demand, they do not show the price volatility that occurs over days, months, or years. As a frame of reference, over the past two decades oil price volatility within single years has averaged about 30%. Although that level of volatility could continue, the alternative oil price cases in IEO2014 assume smaller near-term price variation than in previous IEOs, because larger near-term price swings are expected to lead to market changes in supply or demand that would dampen price volatility.
IEO2104 is an abbreviated edition of the report that focuses on world liquid fuels markets. A full edition of the report that includes projections of supply and demand for all energy sources will be released in 2015.
I think it is now clear that limits to growth type scenarios for liquid fuels just aren't going to happen, at least out until 2040.
Rapidly growing alternatives like the electrification of transport also have the effect of reducing oil prices, and so prolonging their competitiveness, whilst better fracking techniques, tar sands to oil and so on however much many of us deplore their use are a fact of life.
So the scenario above does not sound unrealistic to me, although perhaps on the high side as I expect the electrification of transport to proceed further and faster both in the OECD and in areas like China than projected.
The slack may simply be taken up by the likes of Africa etc though.
Posted by: Davemart | 10 September 2014 at 03:38 AM
I am afraid that the middle east and much of the Muslim parts of Africa and Asia is about to become one huge war zone in the years ahead. Oil demand in these regions will go down with the destruction of their economies. The scale and the number of people affected is already so high that not even the US or the combined NATO forces can do much about it. Remember it took 250,000 US soldiers and 200 billion USD spend per year and about 1000 fatalities per year to keep things under control in Iraq and Afghanistan. Now that these soldiers are not there it is spinning out of control. Today the problem is even bigger because it has also spread to Syria, Yemen, Libya, Niger and northern Nigeria and other countries are about to be added to that list. The West does no longer have the resources or willingness to contain this evil in a human manner with small percentages of collateral damage. So we don't and there will be much more war as a result. We will see what will happen in the coming decades but I would not invest a penny in these regions as I find it most likely that they are going down in a very big way.
Meanwhile I say full speed ahead with gas and oil fraking, Tesla's giga battery factories, wind power and solar power. The West does not need the middle east oil in the long-term and there should be time to become self-supplied with energy before that region falls completely apart.
Posted by: Account Deleted | 10 September 2014 at 05:13 AM
We need more cellulose biofuels, more FFVs and more E85 pumps. This is a 10% solution, not a 0.1% solution.
Posted by: SJC | 10 September 2014 at 07:12 AM
USA has many quick and easy win-win solutions:
1: progressively electrify all local ground transportation modes.
2. use low cost locally produced NG and (Wind and Solar) to produce more electricity as required.
3. export surplus shale oil and bio-fuel.
4. let Arabs fight and kill each other as they used to do so well for centuries.
5. sell the apparent losers more conventional arms to avoid having a single strong winner.
6. do like Japan and restrict immigration from those troubled areas.
Posted by: HarveyD | 10 September 2014 at 08:30 AM
$100 billion for high speed rail in California where funding is not established and counties having major bond issues for light rail are reasons electrification will not happen.
NG/CNG for trucks and buses IS a way to go, that will help.
There is NO "surplus" shale oil nor biofuel, the supposed blend wall is a myth once we get enough E85 pumps. Oil companies have been discouraging dealers from installing them, that is anti trust which WILL be prosecuted.
Posted by: SJC | 10 September 2014 at 08:54 AM
HarveyD
I more Politically Correct (PC) approach would be to support women's education. With education, the population growth rate would fall, the demand for resources would fall in the long term and we might even have fewer wars.
Posted by: sd | 10 September 2014 at 10:21 AM
@sd:
We are doing the opposite.
1. We have all kind of baby bonuses to boost our birth rate. It is working and our birth rate has gone up from 1.36 to over 1.92 in the last 10 years or so.
2. Our very liberal immigration policies promote the arrival of 300,000+ people every year, many have up to 4 wife (officially called maids, sisters, nieces etc) and will have (like Ben Laden) up to 55 children per enlarged family.
3. Our population has gone up from 11 million to over 35 million in the last 64 years. At that same increasing rate, it will go up to over 105 million by 2070 or even by 2050/60. We enough maids and children, enlarged families can live fairly well on baby bonuses and children allowances as long as maids are recycled.
@SJC:
USA should already have 30,000 to 50,000 miles of high speed e-rail to compete with China, Japan, So-Korea, EU etc. Relying on air travel is not effective enough and is costing USA extra $$ billions every year plus increased pollution and GHG.
Posted by: HarveyD | 10 September 2014 at 01:03 PM
SHOULD is the operative word, it isn't and it won't. Ever since California Prop 13 in 1978 limited property tax, the Reagan revolution said taxes are evil. Every one wants stuff, but no one wants to pay for anything.
Posted by: SJC | 10 September 2014 at 01:09 PM
HarveyD
According to the CIA, the estimated 2014 birthrate in Canada is 1.59/woman. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2127rank.html This is well below replacement which needs to be about 2.2 - 2.3 to account for those that die before reproducing. The US is about 2.01 which is still below replacement. Even Mexico is down to 2.29. Most of the countries with really high birthrates are in Africa and the Middle East. Even India is down to 2.51.
Anyway, I will stick with my PC suggestion for more education for women. War is so messy. I could suggest getting rid of religion but that is probably not PC.
On your other comment, the US is not likely to have high speed rail any time soon except on the coasts as the population density and the distances traveled will not support it.
Posted by: sd | 10 September 2014 at 04:08 PM
Increased consumption means much higher prices. What's the price that will make alternatives broadly more economical? I mean, some are already there if manufacturers would head in that direction for real. EVs are good money savers for the right commuters. As oil goes higher, and that is all the EIA has really said, then EVs become a no-brainer for almost everyone. So, go to it China. Cunsume yourself into the same constricted economic position as our creepy and corrupt politicians have cornered us. Yes, join us in the land moronic consumer conformity where your choices are made for you by those that own your great and wonderful leaders.
Seriously though, we are pretty close to pricing oil out. Is the EIA too dumb to see that or are they simply regurgitating the message they receive from congress?
Posted by: Brotherkenny4 | 11 September 2014 at 12:43 PM
We have not even produced 100 million barrels of oil per day worldwide, this says we will need to produce 138 million barrels of oil per day by 2040. From what I have read, that is not possible.
I said years ago that we would hit peak oil but China and India would demand much more every year. This will tighten the market, drive up prices and create shortages. We can either do something to mitigate this, or continue creating oil wars...our choice.
Posted by: SJC | 11 September 2014 at 01:18 PM
ItS not me that increase the demand of liquid fuels. On the contrary I tend to reduce my consumption of liquid fuel over the years. In the eighty I had a small car because even in this era I was concerned to reduce pollution to a minimum and I did 25 mpg average. In 2005 I bought a dodge neon and it average 35 mpg, I still have it. Now im looking for a replacement car that I will buy around 2022 and it will average 40 mpg or higher. Im responsible since 1973 when I use to hate liquid fuels for life but there is no replacement so I run small 4 cylinder cars and also im cheap so I need to pay a minimum for the car and for the fuel.
I won't buy a bev because it cost more overall then a liquid fuel car, especially if you live in an apartment and you park into the street.
I will be glad to buy a bi-fuel nat gas+gasoline car if ever they release it on the market, that would be the best but for a strange reason there is none on the market and the stupid government is subsidizing bev and fcv vehicles???
Posted by: gorr | 14 September 2014 at 07:22 AM
@sd'
The 1.9 birth rate referred to our part of Canada ONLY. We used to have the lowest and are now close to the highest.
Posted by: HarveyD | 14 September 2014 at 08:32 AM