Oil use dips for first time in 20 years
The International Energy Agency today revealed that for the first time in more than 20 years, consumption has fallen in the world’s 30 richest economies.
Consumption in 2006 among the ‘first world’ countries that make up the Organisation for Economic Co-operation and Development and account for about three-fifths of world demand has slipped by 0.6%.
The dip in oil use comes after a year in which the price hit records of about $78 a barrel. Since then, a host of factors - and now, not least, data showing slackening consumption in the West - has seen the price collapse by a third.
The mild winter and heavy selling of the market by hedge funds and other financial players have seen the price fall to little more than $50 since the turn of the year. Brent crude for next month delivery was today up 15 cents at $51.90.
While the booming economies of the world such as China and the Middle East ensured that global consumption grew by 0.9% in total last year, the IEA pointed out that the figure is lower than in previous years.
It was 1.5% in 2005 and 3.9% in 2004. But the dip may be just a blip. Oil analysts do not believe the Saudi-led oil producers’ cartel will allow the oil price to fall for much longer.
Some believe Opec has set a floor of $60 a barrel for the international oil price, and that its member countries will now close off the taps, constrict supplies and force the price back up.
Meanwhile, hopes for a brave new world of alternative, agricultural-based oils may be about to be dashed on the rocks of commercial reality: the cost of ethanol has increased on the back of soaring corn prices, making it more expensive than the fallen cost of traditional oil.
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