Our focus is on oil, but Old King Coal is very much alive and kicking

BP chose a good time to publish its annual Statistical Review of World Energy yesterday – for it came just after the spike in oil prices to a record $139 a barrel last week, and a warning from the chief executive of Russia’s Gazprom that oil might go to $250 a barrel next year.

BP’s analysis of the production and demand not just for oil but also for other energy sources goes back for 57 years. That is prior to the first oil shock in 1973/4, and even the founding of Opec in 1960, so it has a long perspective on the twists and turns of the energy market. This review is the most thorough source of information on the energy market that there is.
The big picture first. Oil remains the largest single source of energy, but for the past six years it has been losing ground to coal. Total energy consumption last year rose by 2.4 per cent, with China, up 7.7 per cent, accounting for more than half that growth. North American consumption rose by 1.6 per cent, India by 6.8 per cent, with the EU actually cutting energy use by 2.2 per cent. Germany achieved the biggest reduction in energy use, 5.6 per cent. The UK managed to cut energy use by 3.8 per cent, but we had rather faster overall economic growth last year than Germany, so our improvement in energy efficiency relative to GDP would have been about the same.

You can see the balance of energy consumption in the first graph. The thing that most stands out is the extent to which the world economy is still driven by fossil fuels. Nuclear and hydro power matter, but their combined output is very small when compared with oil, coal and natural gas.

According to BP there are still reasonable supplies of the big three. Proven oil reserves were basically steady last year at 41.6 years’ output, with the bulk of those reserves in the Middle East (see pie chart). Gas reserves were down a little at 60.3 years’ output, with most split between the Middle East and Russia (see other pie chart). As for coal, that is more plentiful, at 133 years’ output. Old King Coal is very much alive and kicking.

We tend to forget this. All our focus is on oil, for the obvious reason that it is the fuel that we see the price of in large figures on every filling station in the land. Most of us have to stump up every week or fortnight to fill the car. But gas and coal are coming to matter more and more, with coal growing fastest. The principal reason for that is that coal is the principal fuel for China and to a lesser extent India. There are obvious implications for air pollution and more generally for carbon emissions. Europe is doing pretty well at cutting energy use; Asia is different.

Independent