China’s oil consumption by 2015 will be “significantly” higher than International Energy Agency forecasts, surging 35 percent from this year, as economic expansion spurs fuel demand, Barclays Capital said.
The world’s biggest energy user may need 13.6 million barrels a day of fuel, versus an IEA estimate of 10.5 million, based on growth in China’s energy demand versus income levels in the past decade, Miswin Mahesh, London-based analyst at the bank, wrote in a report today.
“We believe key agency forecasts, such as those of the IEA, are too conservative,” said Mahesh. “To get down to consensus forecasts would require radically higher price elasticities, higher prices and lower income elasticities than we observe for the country.”
China’s per capita energy demand rose 50 percent in the past decade as income climbed 86 percent, and a “simple extrapolation” to the next five years would show a 4.2 million barrel-a-day increase in oil consumption compared with 2010, Barclays said.
“We expect vehicle and oil demand growth to be more sensitive to income growth than changes in oil prices,” the report said.
The demand for new vehicles and goods will support a 40 percent increase in diesel consumption to 4.8 million barrels a day by 2015 from 2011, according to the report.
The nation will also buy crude over the next five years for its strategic petroleum reserves when facilities are ready for filling, Barclays said.
“China will continue to be a very important aspect of the market, especially during periods of price correction, helping to provide a price floor,” they said.