Last year may have been a watershed moment for world energy consumption. That assessment comes from BP’s just released 2015 Statistical Review, which provides a roundup of the global energy picture as well as future projections of supply and demand.
BP says that a “tectonic shift” is underway, and 2014 may have been the year in which we all look back and see it as a pivotal moment for energy markets.
Global supplies continue to climb and the US has produced a massive amount of oil and gas from shale.
OPEC is producing at elevated levels and so is Russia. Non-OPEC energy, largely made up of US shale, has undermined the influence of OPEC, a shift that could last many years. An era of energy abundance could be here to stay.
But it is on the demand side that a potential revolution is taking place. BP notes that 2014 saw shockingly slow rate of growth in global demand for energy, expanding by a mere 0.9 percent.
And a lot of that boils down to China, which saw its demand for energy grow at its slowest rate since the end of the last century. At the same time, renewable energy is the fastest growing source of new energy supply.
Global greenhouse gas emissions also expanded at the slowest level since 1998. Taken altogether, we are living in a time that is seeing huge changes in energy flows, and 2014 could have been the inflection point.
But then there was one little nugget that sort of muddies the whole picture. The EIA says that oil production actually increased by 24,000 barrels per day last week, on top of several prior weeks of production gains.
So which is it? Is production falling, as the EIA’s drilling productivity report says, or is it increasing, based on weekly data? No one knows and it is confusing investors and traders.
We probably won’t get a clearer picture for several more weeks, once more solid data come in. But the predicament demonstrates that the markets are often driving by looking through the rearview mirror at past data.
