VOL. XLVI
No 3
ENERGY FINANCE
Oil Demand To Grow At 0.6% In 2003, Says Salomon Smith Barney
Global oil demand is expected to grow by 0.6% in 2003, assuming global GDP growth of 3% in the year compared to GDP growth of 2% in 2002, according to an integrated oil research note issued on 4 December by Paul Ting of Salomon Smith Barney. The paper, which analyses oil demand and the relationship between oil consumption, GDP, OPEC and oil prices, says that traditionally, a one percentage point increase in GDP growth has led to an increase in oil demand of 0.6%, all other things being equal. On this basis, a demand increase of this order is to be expected between 2002 and 2003, less than half the IEA projection of an increase in oil demand of 1.3%. However, the paper notes, all other things are not equal. One factor is, of course, price. Historical evidence suggests that if oil prices are “too high,” the price elasticity effect on demand can mitigate, if not totally reverse, the income elasticity effect on demand. The paper concludes that oil demand has been significantly reduced by high oil prices in the past three years, and that GDP and oil prices are just the most obvious of factors amongst many affecting demand. Hence, “even if OPEC were able to engineer further cuts, their effort may be complicated by the vicious cycle of high price-low/no demand growth scenario.”
Relationship of Oil Consumption, GDP, OPEC & Oil Prices
|
|
WTI Oil Prices ($/bbl) |
US Petroleum Product Demand (MB/D) |
US Product Demand % Change |
US Oil Demand/Unit of GDP (1973=100) |
% Change |
Global GDP (1973=100) |
Global GDP % Change |
Global Oil Demand (MMB/D) |
Global Oil Demand % Change |
|
1973 |
3.87 |
17,308 |
|
100.0 |
|
100.0 |
5.9 |
|
|
|
1974 |
10.37 |
16,653 |
-3.8 |
96.6 |
-3.4 |
102.3 |
2.3 |
56.4 |
|
|
1975 |
11.16 |
16,322 |
-2.0 |
89.9 |
-7.0 |
103.6 |
1.3 |
56.2 |
-0.4 |
|
1976 |
12.23 |
17,461 |
7.0 |
91.9 |
2.2 |
109.1 |
5.3 |
59.5 |
5.9 |
|
1977 |
14.22 |
18,431 |
5.6 |
92.0 |
0.2 |
113.9 |
4.4 |
62.0 |
4.2 |
|
1978 |
14.55 |
18,847 |
2.3 |
91.5 |
-0.6 |
118.6 |
4.1 |
64.3 |
3.7 |
|
1979 |
25.08 |
18,516 |
-1.8 |
89.9 |
-1.8 |
123.3 |
4.0 |
65.4 |
1.7 |
|
1980 |
37.96 |
17,056 |
-7.9 |
83.1 |
-7.6 |
126.5 |
2.6 |
62.7 |
-4.1 |
|
1981 |
36.08 |
16,058 |
-5.9 |
76.5 |
-8.0 |
128.6 |
1.6 |
60.9 |
-2.9 |
|
1982 |
33.65 |
15,296 |
-4.7 |
74.4 |
-2.7 |
129.1 |
0.4 |
59.5 |
-2.3 |
|
1983 |
30.30 |
15,231 |
-0.4 |
71.3 |
-4.2 |
132.4 |
2.6 |
59.2 |
-0.5 |
|
1984 |
29.34 |
15,726 |
3.2 |
68.8 |
-3.5 |
138.8 |
4.8 |
60.0 |
1.4 |
|
1985 |
27.99 |
15,726 |
0.0 |
66.4 |
-3.4 |
144.3 |
4.0 |
60.2 |
0.4 |
|
1986 |
15.05 |
16,281 |
3.5 |
66.7 |
0.4 |
149.3 |
3.4 |
61.8 |
2.6 |
|
1987 |
19.19 |
16,665 |
2.4 |
66.3 |
-0.6 |
155.1 |
3.9 |
63.3 |
2.3 |
|
1988 |
15.98 |
17,283 |
3.7 |
66.3 |
-0.1 |
162.1 |
4.5 |
65.1 |
2.9 |
|
1989 |
19.68 |
17,325 |
0.2 |
64.3 |
-3.0 |
167.4 |
3.3 |
66.1 |
1.5 |
|
1990 |
24.52 |
16,989 |
-1.9 |
62.2 |
-3.1 |
171.9 |
2.7 |
66.4 |
0.5 |
|
1991 |
21.49 |
16,714 |
-1.6 |
61.8 |
-0.7 |
175.0 |
1.8 |
66.8 |
0.7 |
|
1992 |
20.55 |
17,033 |
1.9 |
61.3 |
-0.8 |
179.4 |
2.5 |
67.4 |
0.8 |
|
1993 |
18.42 |
17,227 |
1.1 |
60.6 |
-1.2 |
184.1 |
2.6 |
67.7 |
0.5 |
|
1994 |
17.19 |
17,718 |
2.9 |
60.3 |
-0.6 |
190.9 |
3.7 |
68.6 |
1.2 |
|
1995 |
18.39 |
17,725 |
0.0 |
59.1 |
-1.9 |
197.7 |
3.6 |
70.0 |
2.1 |
|
1996 |
22.02 |
18,309 |
3.3 |
59.4 |
0.5 |
205.7 |
4.0 |
71.6 |
2.3 |
|
1997 |
20.65 |
18,620 |
1.7 |
57.9 |
-2.5 |
214.3 |
4.2 |
73.1 |
2.1 |
|
1998 |
14.39 |
18,917 |
1.6 |
56.3 |
-2.9 |
220.3 |
2.8 |
73.6 |
0.7 |
|
1999 |
19.33 |
19,519 |
3.2 |
55.6 |