Crude demand 'may have peaked'

21/01/2009

Despite widespread concern last year that the energy industry was reaching a period of peak oil, where prices rise inexorably as supply dwindles, analysts are now presaging that the end of expanding demand for oil may have come.

In an interview with Reuters, Peter Davies, former chief economist at BP, said that many developed nations in the Organisation of Economic Cooperation and Development have seen weakened demand for crude and derivatives such as heating oil in recent years.

And now the US, the world's largest consumer of oil, is also witnessing a sharp decline in demand for oil, heating oil, DERV, petrol and other distillates across all sectors.

"There is a reasonable likelihood that OECD oil demand has peaked," he announced.

Such a scenario could keep crude and heating oil prices subdued in the coming years as new energy alternatives are sought out and dependence on oil drops.

In the summer of 2008, many households in the UK were hit by the soaring cost of crude as it pushed up petrol, DERV and heating oil prices.