China’s rebalancing and oil consumption patterns

Journal article

China has constituted the most significant source of the incremental growth in global oil demand over the last decade, adding around 5 million b/d between 2000 and 2012. This is expected to continue well into the future: the International Energy Agency (IEA) estimates that China will account for more than 40 per cent of the increase in oil demand to 2035. A big part of that growth story has related to diesel, which has assumed a growing importance in the energy production and consumption of the world’s fastest growing emerging market economies. Fuelled by trade and investment, China’s growth has strongly supported diesel demand over the last decade. The dominant position of diesel in commercial freight traffic, be it by truck or rail, has made it the fastest-growing demand component. In China, the government mandate requiring all trucks to be fuelled by diesel by 2010 simply accelerated the already rising momentum of diesel demand growth. Further, diesel demand received an extra boost from power problems that led to greater use of diesel as a back-up fuel. In 2004, 2008, and 2010, power shortages during the winter months together with periods of government power rationing (to achieve environmental targets) contributed to buoyant diesel demand. The heavy industrial and mining sectors –such as coal, ship building, steel, and cement – that rely heavily on diesel, boomed throughout the 2000s. It is thus hardly a surprise that diesel was the backbone of Chinese oil demand growth, to the extent that Chinese oil demand growth was synonymous with diesel demand growth.

Authors: Fattouh, B; Amrita Sen

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Oxford Institute for Energy Studies
• Journal: Oxford Energy Forum
• Volume: 95
• Pages: 6-8
• Publication date: 2014-02-01
• Edition: Publisher's version
• ISSN: 0959-7727
• Language: English
• Keywords: OIES