HAMMOND | Global energy consumption slowed significantly last year because of sluggish economic growth worldwide, but gas prices still remained at record highs.
Mark Finley, general manager of BP's global energy market and U.S. economics, told the Lakeshore Chamber of Commerce on Thursday at Dynasty Banquets that worldwide energy consumption grew by 1.8 percent, significantly below the average historical growth rate of 2.5 percent. He attributed the laggard growth to a weaker-than-normal economy.
Almost all of the growth in energy consumption took place in emerging economies, and China and India together accounted for 90 percent of the world's growth in energy demand, Finley said. China for instance single-handedly accounted for 50 percent of the world's use of coal.*
Overall energy demand in more developed countries fell for the fourth time in the past five years to the lowest level in a decade, partly because of a large decline in the use of gas and coal in the United States. A mild winter, a plunge in natural gas prices and more widespread use of fuel-efficient vehicles led to last year's decrease.
The United States and other counties have been using energy more efficiently, Finley said.
"The economy has grown in those developed countries by 26 percent in those 10 years," he said. "We have 26 percent more economic output without growing our energy consumption at all over the last 10 years. We're becoming more efficient obviously."
The United States posted the biggest one-year gain in energy efficiency in the past 30 years, Finley said. Drivers for instance have been buying smaller, more fuel-efficient vehicles in response to the high gas prices.
Gas prices, however, remained virtually flat at record high levels last year, partly because countries such as China and Saudi Arabia built up their strategic reserves in case political turmoil in the Middle East led to disruptions in supply, Finley said. Prices likely would have fallen along with demand if governments in emerging counties hadn't stockpiled so much oil, he said.
"So far this year, things have changed," he said. "We think supply is growing faster than demand. We've seen worldwide oil prices fall by about $20 a barrel this year."
Prices at the pump should ease more in the Midwest when the massive modernization project at the BP Whiting Refinery is finished by the end of the year, since it's only producing at 50 percent capacity, local BP official Thomas Keilman said.
Worldwide, oil has been losing market share for the past 40 years, while natural gas, coal, hydroelectricity, nuclear and renewable forms of energy have been gaining market share, Finley said.
"In fact, oil has lost market share every single year for the last 13 years in a row," he said. "Why is oil losing market share? Because it's so expensive."
Oil prices have doubled since 1980. The price increased by a modest 40 cents per barrel last year, the smallest one-year change since 1978, but that wasn't much consolation to motorists who are already paying a record high amount at the pump, Finley said.
On the production side, the United States dramatically increased its production of crude oil last year, largely because technological advances have allowed it to be extracted from shale, Finley said. Last year marked the biggest one-year increase in oil and natural gas production in U.S. history.
* Editors note: This story was corrected from previous versions.