Oil demand shows signs of easing

GLOBAL oil demand is expected to peak before 2020 as a ”perfect storm” of regulation promotes energy efficiency, new technology and biofuel use across the world, a study suggests.

The report, by industrial consultancy group Ricardo, challenges the widespread view that ”peak oil” will come as soaring demand from emerging markets causes oil supplies to diminish. The report concludes that the peak in demand will be no more than 4 per cent above the record set last year, when the world consumed 87.4 million barrels a day. Demand in 2035 is expected to be 3 per cent below that.

”The world is nearing a paradigm shift in oil demand,” said Peter Hughes, managing director of the energy practice of Ricardo Strategic Consulting.

”The drivers working against oil demand growth are increasing in number and intensity, with the consuming nations increasingly focused on reducing their dependency, supported by an ever-stronger legislative framework.”

Mr Hughes said that even emerging countries would attempt to limit consumption, as energy security moved up the agenda following supply shocks in the Arab spring.

The study concludes that first-generation biofuels will play an increasing role in energy use, as higher crop yields and agricultural technology make recent concerns about food price inflation seem overplayed.