Trends in the energy industry gradually shift over time, whether in terms of the growth in demand for oil in developing nations compared to Western industrialized countries; in terms of the output of crude in OPEC member states compared to non-OPEC producers; or in terms of increasing demand for natural gas, particularly for power generation at the expense of coal and petroleum products. The year 2013 will represent a major tipping point with regard to the trends of global consumption of crude oil. The IEA forecasts that for the first time in history, and as a result of sustainable development, increasing per-capita income and large population growth year-to-year, oil consumption in developing, oil producing and emerging countries (including China, India, South Korea and Brazil) will overtake that of the Western industrialized member states of the OECD. Other causes for this include the growth of the services factor in these OECD countries instead of manufacturing, as well as energy conservation, the enactment of strict laws on energy and relatively low levels of population growth. Yet this forecast by the IEA is not new, except that the timeframe involved is being brought forward in light of the current economic slowdown in Europe and the United States. According to the statistics of the IEA, the rate of consumption of crude oil in Western industrialized countries in 2013 is expected to reach 45.1 million barrels per day, compared to around 45.7 million barrels per day in non-OECD countries. This new trend in oil consumption will gradually leave its mark on the future strategic relations of oil-producing countries, in addition to their commercial and investment-related policies – something that has already begun to happen, albeit in a limited manner. With regard to the production of crude oil, the IEA predicts that oil production in OPEC countries will reach around 30.5 million barrels per day next year, compared to about 54 million barrels from non-OPEC countries. This means that huge supplies will be produced outside of OPEC – something that is already underway. Some changes are expected to take place at the level of these rates, but without the big picture of production being altered. To be sure, production from outside OPEC will remain higher, led by Russia with about 10 million barrels per day. Within OPEC, meanwhile, the output of Iraq, the UAE and Angola is expected to increase, in conjunction with a decline in Iranian production, which has already begun to fall because of economic sanctions imposed by the West. But here, too, these changes are not expected to influence the overall difference in production between, on the one hand, OPEC-member states, and on the other, non-OPEC members, at least in the foreseeable future. The production of OPEC member states increased from about 19.5 million barrels per day in 1998 to about 33 million barrels per day in 2008; yet production is not anticipated to grow much more beyond this level in the near future. There are other factors that affect the energy industry, whether in terms of consumption or production (e.g. wars; sanctions on producing countries; rapid increases in energy prices; the use of new technologies in the liquefaction of gas; drilling to record undersea depths – leading to reduced prices and increased supplies; shale gas; increased focus on environmental conservation; and the repercussions of industrial incidents, such as the Three Mile Island nuclear accident in the USA and Fukushima in Japan). These factors and others have encouraged the use of gas, which competes with other energy sources, especially in large-scale use in power generation. For instance, natural gas has come to dominate the power generation sector in the U.S., where the use of petroleum products in power plants has been halted, and subsequently, there has been a gradual reduction in the use of coal in power plants as well. Two decades ago, 80% of the fuel used in power plants in the U.S. came from coal, 12 % from natural gas, and only 8 % from oil. This equation changed in 2000, when coal accounted for about 53 %, gas accounted for 16 %, while the use of oil in power generation was halted. At present, especially after gas prices fell to about US$ 2 per one million BTU, compared to US$ 10 in 2008, gas and coal now account for an equal percentage of fuel usage in power generations in the United States. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
