According to the information available, significant changes are taking place in the global oil industry, especially in terms of increased oil consumption levels, despite the global economic downturn. This means that the vital role oil plays in the world economy has been restored. In truth, this is a new trend that contradicts recent past developments, where global economic crises coincided with a marked decline in oil consumption, for example as happened in the aftermath of the Asian economic collapse in 1998. Among the things that explain this new trend is the fact that the economic decline this time has taken place across the major industrialized countries, which usually see an extremely limited annual growth in energy consumption. This is not the case in emerging nations, however, where the annual energy consumption rate has risen by record amounts recently. The recent annual report published by the Secretariat of OPEC (World Oil Outlook 2011) has explained at length a set of future indicators pertaining to the global oil industry, most of which showing the high probability of increased demand in the future. This annual report was drafted by a number of experts from oil-exporting countries. Below is a summary of what the report had to say: OPEC assumes that the reference basket price for its oils is on the increase. Instead of the previous levels within the price range of 75 to 85 dollars per barrel, the new price range for this decade is 85 to 95 dollars per barrel. The reason for this new assumption is the continued rise in demand for oil a well as increased speculation as a result of political developments in the Middle East. What are the reasons behind these assumptions? The main reason in fact lies in the increased prices of alternative fuels from non-conventional petroleum sources. For instance, the cost of coal-to-liquids (CTLs) backstop prices rose to the range of 74 to 85 dollars per barrel, while Canadian oil sands production costs rose by about 10% higher than previously assumed. As is known, whenever global crude oil prices rise, the production of high cost non-conventional oil increases, and the assumption of higher oil prices in the future subsequently re-emerges. This trend is also accompanied by a limited usage of sustainable alternative energy sources, especially amid concerns regarding nuclear energy in the aftermath of the incident at Fukushima in Japan. Another important reason for rising oil consumption in general and oil in particular, is the world population growth, in addition to the increasing number of densely populated and expanding cities, at the expense of the countryside, and an ageing population and the services and higher energy consumption this entails. Estimates predict that the world population will increase from just over 6.9 billion in 2010 to almost 8.6 billion in 2035. Only 110 million of the increase will take place in the Organisation for Economic Co-operation and Development (OECD) countries, while close to 1.6 billion more people will be living in developing countries. Over the period 2010–2035, commercial primary energy demand will increase by 51%. Fossil fuels (crude oil, natural gas and coal), will make up 82% of the global total energy consumed by 2035, compared to 87% at present. For most of this period, oil will remain the energy type with the largest share, albeit in conjunction with a progressive decrease in oil consumption levels. Over the same period, coal is expected to gradually become the primary energy source, and by 2035, it will represent 29% of total energy consumption, similar to today, while oil's share will fall from 34% to 28%. Gas use's overall share is expected to rise from 23% to 25% of total energy consumption. Oil consumption is predicted to rise from around 90 million barrels per day at present, to around 110 million barrels per day by 2035. It is also projected that oil consumption levels will decline in Western industrialized countries, having reached a peak in 2005, while developing countries in Asia will account for 80 percent of the total demand growth. The reason for the large increase in consumption can be attributed to global economic growth, population growth, improved standards of living and the broad adoption of technology, in addition to oil prices. But oil prices are no longer the only, or indeed the primary factor in shaping the use of this strategic commodity, as was the case before. Many additional factors now play an important role in the growth of oil consumption, and also oil prices. *. Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
