August 2, 2014
Rising energy demand is generally seen as a sign of good things: People working harder and doing more.
Figures recently reported by BP in its 63rd annual Statistical Review of World Energy show that last year the U.S. saw strong growth in energy demand, a turnaround from the year before.
The report also showed that massive investments helped the U.S. achieve the world’s largest increase in energy production last year — and in turn, create thousands of new jobs across America.
“Indeed, the U.S. increase in 2013 was one of the biggest oil production increases the world has ever seen,” wrote BP Group Chief Executive Bob Dudley.
Growth in energy demand in the U.S. has historically lagged behind developing nations, or non-OECD economies. This “energy gap” between the West and the East existed for much of the last decade, as demand in developing nations rose rapidly.
Last year, however, the momentum shifted. Manufacturing and job growth in the U.S. drove up U.S. energy demand, while in non-OECD economies, it slowed dramatically. Much of the slowdown was concentrated in Asia, according to BP General Manager, Global Energy Markets & US Economies, Mark Finley. Growth among developing nations was 3.1 percent.
The U.S. experienced a rebound with a 2.9 percent production increase in 2013, following a decline of 2.8 percent in 2012. This U.S. growth accounted for the net rise in energy demand across all developed nations in 2013, which otherwise would have seen a decline, the report showed.
“The contrasting experiences of North America and Asia Pacific reflect the differing fortunes of the world’s largest energy consumers, China and the US,” Finley said. “All told, the diverging performance of China and the US caused the ‘energy gap’ between non-OECD and OECD energy consumption growth to narrow sharply. It became the smallest since 2000.”
Tapping new reserves of energy using advances in production technology, America posted record-breaking gains in oil production. BP’s report notes that U.S. oil production rose by more than 1.1 million barrels per day, marking the second year in a row that the U.S. achieved the biggest increase in its history.
U.S. oil production gains have not only created thousands of jobs. They’ve also helped propel the American economy out of recession and stabilize world oil prices. Finley noted that U.S. production gains are the reason oil prices have remained so stable over the past three years, even amid large oil-supply disruptions in Libya and in the Middle East since the “Arab Spring,” which should have sent prices soaring.
“For the biggest part, the answer has to be that the supply disruptions in Africa and the Middle East were matched almost exactly by the shale-related production increases in the US,” Finley said. “It is a fair conclusion that oil markets would look very different today, had we only witnessed supply disruptions on the scale they actually happened.”
Originally published in National Journal.