As previously reported on the Energy Intelligence blog, the economic turmoil of the past week could bring a silver lining for American consumers: lower gas prices. The price of crude oil, a major component of gasoline, closed on Tuesday at around $79 per barrel, the lowest since last September and a sharp decrease since the start of August. And, according to a report released today by the International Energy Agency, with recent fears over a double-dip recession lowering growth in demand around the world, the price of oil could continue downward. [See a roundup of political cartoons on gas prices.]
"Concerns over debt levels in Europe and the US, and signs of slowing economic growth in China and India have spooked the market and raised fears in some quarters of a double dip recession. From an oil market standpoint, perceived wisdom is that this must inevitably mean weaker oil demand to come," the report says.
According to the report, global demand in 2011 is expected to average 89.5 million barrels per day, which is a 1.4 percent year over year increase from 2010, though 60,000 barrels per day lower than previously projected. The energy agency says their revision was driven by weaker demand in the United States and China. [See a slide show of the 10 states that use the most energy per capita.]
This slowed expansion in demand is coupled by an increase in supply in recent months. In July, Saudi Arabia's crude oil output, at 30.05 million barrels per day, was the highest in three decades, as it and other members of the Organization of Petroleum Exporting Countries made up for losses from the Libyan crisis. [See a collection of political cartoons on turmoil in the Middle East.]
According to the International Energy Agency, while the lower oil prices could be seen as a benefit, the global economic situation gives much more reason to worry. "Lower energy input costs are well and good, but not if they are achieved at the cost of another economic crisis," the report says.