April 1, 2012

Growing Oil Production And Demand: Gulf States

Worldwide oil consumption has increased with 14 % over the last decade. The Gulf states are way ahead in terms of consumption. As well as production.

According to The Economist, The Middle East saw consumption grow by 56% in the first decade of the century. This is four times the global growth rate. And nearly double the rate in Asia, as can be derived from the map. Energy use per head is also rising. According to BP, in 1970 in the Middle East it was half what it was in other emerging markets. By 2010 it was three times higher.

Three explanations for this growing taste for oil:
  1. Demography. Populations in the Persian Gulf, and in OPEC as a whole, are growing fast. Tiny Qatar’s population trebled between 2000 and 2010. Saudi Arabia’s grew from around 20m to 27.4m, a 37% increase. Demand for power, water and petrol has risen accordingly.
  2. Economic structure. It takes energy to produce energy: pumps must be powered and vast quantities of seawater desalinated. Aramco, the Saudi state oil company, sucks up nearly 10% of the country’s energy output. Attempts to diversify the Saudi economy beyond oil, gas and petrochemicals have not gone far.
  3. Inefficiency of domestic energy markets. Some 65% of Saudi electricity is generated using black gold, even as successive price shocks and the relative inefficiency of oil generation have seen it all but phased out in rich countries. Oil is used with such profligacy because domestic consumption is massively subsidised. According to the International Energy Agency, global oil subsidies added up to $192 billion in 2010. OPEC countries accounted for $121 billion of the total.

Read full atricle: Keeping it to themselves; Gulf states not only pump oil; they burn it, too >>

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