How Energy Demand Bounced Back After The Pandemic


Last week the BP Statistical Review of World Energy 2022 was released, covering energy data through 2021. The Review provides a comprehensive picture of supply and demand for major energy sources on a country-level basis. It is a primary data source for numerous companies, government agencies, and non-government organizations.

Since its release, I have been analyzing the data and creating graphics. I strive to uncover nuggets of information and analyze the data in unique ways. In upcoming articles, I will delve deeper into the various energy categories, but today I want to simply provide a high-level overview of this year’s Review.

Energy usage and consumption statistics continue to be dominated by the impact of the Covid-19 pandemic. Energy consumption and production dropped in 2020, but since then demand has rebounded. But, supply chain constraints have impacted the ability of energy producers to respond. The result has been high energy prices.

Energy Overview

Primary global energy consumption grew by 5.5% last year to a new all-time high. This represented the fastest energy consumption growth since the early 1970s and is a reflection of strong global demand bouncing back from 2020’s Covid-19 energy consumption decline.

Fossil fuels accounted for 82% of primary energy use last year, essentially the same as in 2020, but down from 83% in 2019 and 85% five years ago. The remaining share of primary energy use consisted of hydroelectric power (6.8%), renewables (6.7%), and nuclear power (4.3%).

Global carbon dioxide emissions rebounded from 2020 levels, growing by 5.9% in 2021. However, this is still about 1% below the record levels of 2019 and 2019.

Oil

Oil still accounts for nearly a third of the world’s energy consumption. In 2021, the world consumed 94.1 million barrels per day (BPD) of oil. This was an increase of 6.0% from 2020, but is still 3.7% lower than consumption in 2019.

Global oil production grew by 1.4 million BPD in 2021, but is still 5.0 million BPD below 2019 levels. US production remains 529,000 BPD below 2019 levels.

Refinery capacity declined by nearly 500,000 BPD in 2021, which was the first decline in over 30 years. This is one factor exacerbating the upward pressure on finished product prices like and diesel.

Natural Gas

Natural gas has been the fastest-growing fossil fuel in recent years, with a global 2.2% average annual growth rate over the past decade.

After falling in 2020, global natural gas consumption grew by 5.3% in 2021 to a new all-time high.

In 2021, the US remained the global leader in both natural gas production and consumption. The US produced 23% of the world’s natural gas in 2021. Russia was in second place with a 17% global share.

Coal

Global coal consumption has been on a downward trend since peaking in 2014. But, coal consumption jumped by 6.3% in 2020, nearly reaching 2014 levels.

China’s coal consumption in 2021 grew by 4.9% to reach a new all-time high. China remains by far the world’s largest producer and consumer of coal, with a 53.8% global share in consumption and a 50.8% share in production.

Coal demand in OECD countries grew in 2021 but was still at the second lowest level in the history of the Review, which dates to 1965. US coal demand in 2021 also rebounded but was still at the second-lowest level since the Review began tracking it in 1965.

Coal remained the dominant fuel for global power generation in 2021, with its share increasing to 36%, up from 35.1% in 2020.

Renewables and Nuclear Power

Renewable energy continues to grow rapidly. Global renewable energy consumption grew by an impressive 15% in 2021 to a new record high.

Solar electricity consumption rose by a record 1.7 exajoules (EJ) — an increase of 22% — but wind power (+2.5 EJ) provided the largest contribution to renewables growth.

Together, wind and solar power provided 2,894 Terawatt-hours (TWh) of electricity in 2021. For perspective, in 2010 that number was 380 TWh.

Wind and solar reached a 10.2% share of power generation in 2021, which was the first time wind and solar power exceeded more than 10% of global generation.

Nuclear consumption grew in 2021 by 4.2% to the highest level since 2006. The US remains the world’s largest consumer of nuclear power, with a 29% share of the global total. China continues to increase consumption at a rapid pace, and now has a 14.6% global share. For perspective, in 2010 China had a mere 2.7% global share of nuclear power consumption.

Summary

As I said a year ago, I expected companies that produce, transport, or sell oil and natural gas should fare well for the foreseeable future. That has certainly been the case as demand came roaring back.

But I believe the growth story for wind and solar power has many years to run. As the world continues to electrify its transport systems, there will be a substantial increase in demand for electricity. Renewables will be called upon to bear an over heavy load.

Supply chain issues will contain to constrain the world’s energy system for the foreseeable future, although high inflation could push world into a recession which could not change that outlook.

By Robert Rapier for Oilprice.com

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