Fundamentals of Business

Demand

The demand side of Peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand has grown at around 2 percent in recent years. Demand growth is highest in the developing world. World demand for oil is set to increase 37% by 2030, according to the US based Energy Information Administration's (EIA) annual report. Demand will hit 118 million barrels per day (bpd) from today's existing 86 million barrels, driven in large part by the transportation sector.

As countries develop, industry, rapid urbanization and higher living standards drive up energy use, most often of oil. Thriving economies such as China and India are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, indicating a doubling rate of less than 10 years. It currently imports roughly half its oil, with predictions of swift continued growth in coming years. India's oil imports are expected to more than triple to some 5 million barrels a day by 2020.

Energy demand is distributed amongst four broad sectors:
√ Transportation,
√ Residential,
√ Commercial,
√ Industrial.

The sector that generally sees the highest annual growth in petroleum demand is transportation. Transportation is therefore of particular interest to those seeking to mitigate the effects of Peak oil.

Population

Another large factor on petroleum demand has been human population growth. Oil production per capita peaked in the 1970s. The world's population in 2030 is expected to be double that of 1980. Some analysts project that people will be much more oil dependent than they are now, while others predict that oil production in 2030 will have declined back to 1980 levels as worldwide demand for oil significantly outpaces production.

8.1.2 Agriculture and population limits

Supplies of oil and gas are essential to modern agriculture techniques, so coming decades could see spiralling food prices and unprecedented famine affecting human populations across the globe. Geologist Dale Allen Pfeiffer contends that current population levels are unsustainable. To achieve a sustainable economy and avert disaster, he maintains that the United States must reduce its population by at least onethird, and world population will have to be reduced by two thirds.

Example
Extract from Bloomberg
European Prices Rise Mo More Than Forecast as Oil Surges (Update3) re By Ben Sills June 30, 2008 (Bloomberg) - Inflation in Europe accelerated more than economists forecast, eroding consumers' spending power and adding to pressure on the European Central Bank to increase borrowing costs even as economic growth cools.

The inflation rate in the euro area rose to 4 percent this month, the highest in more than 16 years, from 3.7 percent in May, the European Union statistics office in Luxembourg said today. Economists had forecast a 3.9 percent rate for June, according to the median of 38 estimates in a Bloomberg survey. Crude Crude oil prices have doubled in the last 12 months and passed $143 a barrel for the first time today. Food commodities have also surged in the past year, boosting how much consumers are paying for staples such as bread and milk.