Fossil Fuel Use Up Again

Global oil use rose by 1 percent in 2006, down from a 1.6-percent increase in 2005 and a nearrecord 3.9-percent rise in 2004.1 Global oil consumption reached 3.9 billion tons in 2006.2 (See Figure 1.)

North America and Asia remain the world’s leading oil users, at 25.3 million barrels and 21.4 million barrels a day in 2006, respectively.3 The United States drained 20.7 million barrels of oil daily—24 percent of the global total.4 Yet U.S. gasoline use dropped by about 1 percent from the previous year as consumers reacted to higher prices.5 Other top consumers include Europe at 16.1 million barrels daily, China at 7.2 million barrels a day, and the Middle East at 6.5 million barrels daily.6

Oil prices rose for the fourth consecutive year due to continued production declines in many countries and political developments that have slowed output in some nations.7 Prices averaged $62 per barrel in 2006, up from $58 in 2005.8 (See Figure 2.) They peaked in July, at $78.40 per barrel, not far from the inflationadjusted record price of $87 per barrel in 1981.9

World oil production also grew by 1 percent in 2006—led by Africa, where new oil fields continue to be developed.10 Significant new discoveries were made in Brazil, the Middle East, and the Gulf of Mexico.11 U.S. production leveled off after more than a decade of decline.12 However, production declines continued for many major producers, including Mexico, Norway, the United Kingdom, Nigeria, Indonesia, and Venezuela.13 The rapid run-up in Russian production that marked the early years of this decade has now slowed.14 Iran saw a slight rise in output, but analysts say the country could become a net importer within a decade, due to stagnant production and soaring domestic demand.15

Natural gas and coal data for 2006 are not yet available, but consumption of both fuels rose in 2005.16 (See Figure 3.) Natural gas use rose by 2 percent that year, to 2.5 billion tons of oil equivalent.17 North America was the only region to see a decline (down 1.5 percent).18 Coal use was up by 4.7 percent, to 2.9 billion tons of oil equivalent, with most of the growth in China, which used 1,082 million tons.19 The next largest consumers were the United States at 575 million tons and India at 213 million tons of coal burned in 2005.20 The United States accounted for about one fifth of world coal use in 2005.21

Some 150 new coal plants, representing almost 100 gigawatts of capacity, could come online in the United States by 2030.22 Concerns about climate change will likely stop many of these, but at least a dozen are already under construction.23 India, which accounts for less than 8 percent of global coal use, could also see significant growth.24 Coal demand there is expected to quadruple by 2031 to sustain economic growth of 9 percent annually, requiring a major rise in coal imports.25

China is second only to the United States in total energy use.26 In 2006, China’s energy use rose 9.3 percent—with coal demand up 9.6 percent, crude oil use up 7.1 percent, and natural gas use up 20 percent.27 China imported 47 percent of its oil in 2006.28 Increasing demand for oil is driven mainly by the rise in private motor vehicles.29 It took China nearly 20 years to have 10 million vehicles in 2003 but only three more years to double that number.30 China’s electric generating capacity rose more than 20 percent in 2006—to 622,000 megawatts— and by some estimates a large coal-fired power plant comes online there weekly.31

The International Energy Agency projects that, if left unchecked, global energy use will rise more than 50 percent by 2030, with fossil fuels remaining the dominant energy source.32 In turn, vulnerability to price shocks and supply disruptions would rise, and carbon dioxide (CO2) emissions could increase by more than 50 percent.33 Other scenarios project that energy efficiency improvements and renewable energy could displace a significant share of fossil fuel use and reduce global emissions.34 In March 2007, the European Union committed to reducing CO2 emissions 20 percent and increasing renewable energy to 20 percent of total energy use by 2020.35