Policy, Planning, and Reearch WORKING PiPERS Energy Development Industry and Energy Department The World Bank January 1989 WPS 112 A Visual Overview of World Oil Markets Kay McKeough, Jose Escay, and Sompheap Sem Oil consumption is expected to increase far more in the develop- ing countries than in the industrial nations by the year 2000 - as the industrial nations shift to a service economy and the developing nations industrialize. The Policy, Planning. and Research Complex distoibutes PPR WorkingPapers to disseminate the findings of work in progress and to encourage the _xchange of ideas among Bank staff and all others intersted in development issues. These papers carry the names of the authors. relect only their views, and should bc used and cited accordingly. The findings, interpretations, and conclusions are the authors'own. l ;.ey should not beauributedto the World Bank, its Board of Directors, itsmanagement, orany ofits member countries. Polac,Pnning, and Rmarch Energy Development Total world demand for oil is expected to But the demand in the developing countries increase about 27 percent in the period 1985- should grow about 50 percent from about 16 2000, from 57 million barrels a day (mmb/d) to mmb/d in 1985 to 24 mmb/d in the year 2000. 73 mmb/d. No other group of countries will experience so great an increase in demand for oil. Demand in the centrally planned economies (in which industry has been protected from the As a result of "industrialization" shifts from effects of the oil shocks) should remain about the industrial countries to the developing na- the same. tions, oil consumption in the industrial sectors of less developed countries has remained predomi- Oil consumption in the industrial countries nant over their transportation sectors. This has is expected to grow only 19 percent in the same important ramifications for fuel substitution, period. efficiency improvements, and other policies. This paper, a product of the Energy Development Division, Industry and Energy De- partment, has also appeared as an Industry and Energy Department Working Paper. Copies are available free from the World Bank, 1818 H Street NW, Washington DC 20433. Please contact Mary Femandez, IENED Publications Manager, room S4- 037, extension 33637. The PPR Working Paper Series disseminates the fmdings of work under way in the Bank's Policy, Planning, and Research Complex. An objective of the series is to get these findings out quickly, even if presentations are less than fully polished. The findings, interpretations, and conclusions in these papers do not necessarily represent official policy of the Bank. Produced at the PPR Dissemination Center T?BLt OF COITEETS A Visual Overview of the World Oil Karkets Ie INT'0DUCTIOV............................................ 1 II. OVCVIIV OF OIL C.S.M. O... ..........................** 3 III. OIL COUStIPTION VESUS PRICE ...... o .................. 5 IV* OIL VESUS WMUCY COWSUKPTIO0 .......................... 9 V. OIL COOSUS1MIOW FORECAST AND KETRAPOLATIO .............. 13 A. Oil Consumption Until the Year 2000................. 13 B. Oil Consumption Until the Year 2010 ................ 18 VI* OIL CONSUMPTION BY ECTO .............. ................. ...e 24 A. Oil Consumption by Sector 1970 - 1986 ............... 25 B. Oil Consumption by Sector - Country CGoups.......... 27 C. Oil Consumption in the Industrial Sector............ 38 D. Oil Consumption in the Transportation Sectoroe...... 41 I. ITRWODUCTION The shock waves of the oil price increases in the 1973-1974 and '979-1980 periods showed vividly that crude oil is one of the most important natural resources in terms of its impact on the economic performance of countries. Therefore, a country's dependency on crude oil cannot be understated even during a period of pientiful supplies and lower prices. This paper focusses on worldwide oil demand and, in particular, the oil consumption in the develuping countriesQ Based on World Bank forecasts, their demand is expected to Increase 50% from 1986 and reach approximately 24 million barrels daily by the year 2000. This means that they will need an additional 3 billion barrels annually to meet their ci; n-teds. No other group of countries will experience this same magnitude of increase. While the volumes of oil that the developing nations consume today may seem small compared to that in industrialized countries, it is important to note that their share of total world oil demand will increase to one-third by the year 2000. These forecasts Pre based on a World Bank model which is reflective of assumptions regarding future global economic activity, the economic performance of individual countries, prices and other factors. Obviously, these assumptions may not come to be accurate which would mean different oil demand behavior. Nevertheless, these forecasts are indicative of trends in the developing countries' share of the world's oil consumption. These graphs are not intended to pinpoint oil demand in any given year but to place these overall trends in perspective. That is, the trends of the developing countries' oil demand is compared to the trends in industrialized countries, centrally planned economies, and the total world. For purposes of this paper, the centrally planned economies include the U.S.S.R., Eastern Bloc countries, China, North Viet Nam, North Korea and Cuba. Since many companies and organizations give forecasts only for the non-centrally-p,anned economies, which include developing countries and the industrialized world. trends are given for comparative purposes for this category as well. Section II provides an overview of oil consumption iilustrating oil consumption iii cerms of volume from 1961-2000. Section III compares these oil consumption patterns to oil price trends since they are an important indicator in the determination of oil demand. It illustrates oil price trends in current and constant (1985) dollars and discusses briefly some factors, including cyclical patterns in the oil industry and business cycles, that could affect prices. Section IV compares oil consumption to total energy consumption. Oil is an important source of energy, comprising just under half of total energy consumption, but its share is expected to diminish. The graphs show that developing countries are more oil-intensive than world averages; however they follow the worldwide trend to reduce the percentage share of oil in their total energy balance. Section V portrays forecasts of oil consumption until the year 2000 and linear extrapolations until 2010. It empiasizes thato despite the small volumes of oil consumed by LDCU as compared to other country groups, LDCs are ezpecred to have the highest growth in oil demand from the years 1985-2000. Their oil demand should increase approximately 502 while in the same period, indiuAtrial countries' oil consumption in expected to grow only by 19Z. Section VI breaks down oil consumption into three major sectors: Industry (industry and electric power), Transport and Other (residential and coi_ercial) and cross-references this data by country group. Due to the de- industrialization of industrial countries and the consequent industrialization of developing countries, there is a much higuer oil usage in the latter's industrial sector than might otherwise be expected and higher than in their transportation sector. This sector usage has important ramifications for fuel substituti6n and other energy policies. -3- II. OVVIEW OF OIL CONSUMPTION This Overview of Oil Cons"mption highlights the increased growth of oil consumption in the developing countries that is forecast between now and the year 2000. Their consumption should grow about 50X, from approzimately 16 million barrels daily to 24 mb/d in this time period. No other country group is predicted to experience the same rate of growth; the centrally planned economies should experience rather flat demand and the industrialized countries, slight increases. Thus, the slope of the demand for the non- centrally planned economies is relatively steep since it takes into account the hir *er consumption rates of developing countries along with the more mild increases in the industrialized countries. The total world's demand closely mirrors that oi the non-centrally planned economies, with the total world experiencing an increase of about 271, from 57mmb/d to some 73 mmb/d by the year 2000 (Figure 1). WORLD OIL CONSUMPTION ACTUAL AND FORECAST ,080 70 t ,. __-~~~~~~~~~ NON-CPE | 40 f . _--SINDUSTRIAL -o 30 20 LDC195 190 1 7 8 8 190 195 20 / 0 E0 1961 1965 190 17-90 185 1995 20 Yeor ~ ~ ~ ~ INUTRA III. OIL CONSUMPTION VERSUS PRICE TRENDS This section illustrates the trends in world oil consumption compared to oil prices and discusses some of the factors that may affect price. Figure 2 compares toe. world oil consumption to oil prices as expressed in both constant and cu. enrt U.S. dollars. From the 1960s to early 1973, there was a steady increase oil consumption in an ^;a marked by cheap oil prices. In response to the 1973 oil price shock, consumption flattened, but then increased again until the 1979-early 1980s price hikes. Nevertheless, with high inflation in the early 1980s, the price of oil in current dollars overlapped the oil price in constant dollars during this period. There appears to have been a cyclical pattern in energy pricing whereby oil prices respond to changes in economic activity. This fluctuating economic activity or business cycle will affect the demand for oil and consequently, the price of oil. In addition, factors such as urbanization and population can affect demand. Similarly, prices are affected on the supply side by the oil industry cycle, characterized by periods of expansion and contraction, whereby higher oil prices generate an increase in investment in the oil sector, bringing on more production, resulting in increased supplies, and eventually a fall in prices. A composite index of various factors can be used to identify turning points in this industry cycle ftd the amplitude of each stage of the cycle; the index shown here (Figure 3)- is based on indicators that reflect the current real price of oil, levels of oil industry activity, and the relative performance of oil company shares compared to the stock market in general. Price behavior can also be influenced by supply concenteation as evidenced by the responses to OPEC's behavior. The price of oil depends where we are in the cycle, i.e., the high or low point, and when changes such as a recession occur. According to this theory, oil prices are passing through the bottom of fpe trough and will be moving on to the next upswing of the cycle (Figure 4)- which should be in the mid-90s. The upswing will be underpinned by a tightening of supplies and expansion of demand. 1/ Source: World Petroleum Markets A Framework for Reliable Projections, January 1988 Draft Report, prepared by the Petroleum Finance Company Ltd for the World Bank. WORLD OIL CONSUMPTION vs. CURRENT & CONSTANT PRICES 70 70 ; 760 WORLD CONSUMPTION 60.0 cX 50 - 50i) 40 4 40 30 , 30 20 CONSTANT 1985 USt 20 10 - CURRENT USS 10 . . . . . . . .. ... . .. . . ........ , ... .. . . . .. .. .. ... ... .. . ,,- O-- ------,---- -- . ; O - 0 pp0 1961 1967 1973 1979 1985 Yeor S86T SA6T S96T SS6T Si61 SE6 SZ6T ST6T S46T S60T S88O SL8T 9~~~~~~~~~~~~~~~~~~9 '4 66Ws §|sl } Xl l }6wa77 ~ VI -X--------------- --------- . ___.. ______.. __. . __..S_*___ *6 ----- - ------ S E.X..A... ..... ------ ..i...i. ) 1l ffi6 X - -- --2- -- -> - - --1-- -- -- -- -- - a S-----A --Y 6 N 1--'- L_---- ----;t -- --- ----- 96 _ -_--^- --^-^---^---- ------ -^---- --^-^- ---------------- 66 s S801Y)KINI ISN30ON0 J0X1NI 3JJSdMO3 3H1 - 8 - FIGURE 4 A PROJECTION OF THE PETROLEUM CYCLE (1988 - 2000) n A~ _\,A/ \, I '- -\/ -9- IV. OIL VERSUS EEGY CONSUWPTIOM Oil is the most important source of energy; therefore, as expected, the oil price shocks in the 1973-1974 arid the late 19709 and early 1980s have caused significant fluctuations in total world energy consumption (Figure 5). These fluctuations can be attributed to the dramatic changes in energy consumption experienced in the industrial countries, which were offset by the relatively stable consumption patterns of LDCs and CPEs. During this period, energy consumption of centrally-planned economies appears to be unaffected and has, in fact, maintained fairly constant growth. LDCs, on the other hand, experienced slight fluctuations. Nevertheless, LDC energy consumption has been growing rapidly so that by 1985, it exceeded energy consumption of CPEs. During the oil price shocks, the patterns of energy consumption of total world and LDCs corresponded closely to their oil consumption patterns (Figure 6) since oil consumption accounts for almost half of energy consumption. However, in the future, energy consumption will continue to grow at a much faster rate compared to oil consumption so oil will account for a smaller percentage of energy consumption. As illustrated in Figure 7, the oil-intensity of energy consumption in LDCs was higher and more volatile than total world averages from 1961 to the first shock in 1973-1974. Although LDCs are more oil-intensive than world averages, they follow the worldwide trend to increase efficiency and convert to other sources of energy thereby lowering their percentage of oil in their total energy supplies. WORLD ENERGY CONSUMPTION ACTUAL AND FORECAST . 111 .C _ WORLD C 9 * 8 c 6 ,..*' __- NON-CPE .-Eo 5 - - _ _ - - - - - INDUSTRIAL 4 4 0 '~ ~~ ~ '~ t ~ ~ ~~~ ~ ~~~~~~ ~~~ ~ ~~ ~ LDC | 1 L 0= oU 1961 1965 1970 1975 1980 1985 1990 1995 2000 Year ENERGY vs. OIL CONSUMPTION TOTAL WORLD AND LDC 11 -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 4.,, *g5 8,,---- 7 -1 ,, WORLD ENERGL CONSUMPTION 4 6 _ _ _ ENERGY CONSUMPTION 0~~~~~~~~~~0 4.,0 0 O -=O E - - - - - - WOR~~~~~~LDC OIL CONSUMPTION , A - - A - 1961 1965 1970 1975 1980 1985 1990 1995 2000 Year OIL AS A PERCENTAGE OF ENERGY CONSUMPTION TOTAL WORLD vs. LDC 455 CL 450 40 LDC~~~~~~~~~~- 35 _ ~~~~~~~~~~~~~WORLD 30 . . . 1961 1965 1970 1975 1980 1985 1990 1995 2000 S4 Year - 13 - V. OIL CONSUMPTION FOCAST AND EUnAPOLATION This section illustrates the future of oil consumption. It should be emphasized that these figures portray trends which do not reflect the cycles in oil consumption nor do they attempt to pinpoint the act9al consumption in any given particular year. The purpose of these forecasts is not to determine absolute numbers, but to provide a sense as to the direction of oil consumption growth, where the markets will be in the future. Part A: Oil Consumption Until the Year 2000, portrays trends based on forecasts by the International Economics Department of the World Bank. Part B: Oil Consumption Until the Year 2010, carries these oil consumption projections forward to the year 2010. The World Bank does not prepare official oil consumption forecasts beyond the year 2000; this section therefore extropolates linearly from the year 2000 to 2010, assuming the factors affecting growth from 1990 to 2000 will remain constant until 2010. A. Oil Consumption Until the Year 2000 Oil consumption in developing countries is forecasted to increase by approximately 57Z between 1985 and the year 2000 (Figure 8), growing from 15 inb/d to 24 mmb/d (Figure 9). By contrast, industrial countries' oil consumption is expected to increase by 19X, only from 31 mmb/d to 36 mmb/d. Hence, total oil consumption of noncentrally-planned economies is estimated to increase by 31X from 47 mmb/d to 61 mmb/d. For the same period, consumption of centrally-planned economies will have the lowest growth of 7Z, from 11 ubid to 11. 6 mmb/d, which decreases total world oil consumption to a growth of 27Z, from 57 mmb/d to 73 mmbId. In terms of the percentage share of total world oil consumption, as illustrated in Figures 10 and 11, the developing countries' share of world consumption in this same period will increase from 271 to 33Z. This growth in LDC oil consumption offsets the decline by other country groups. Industrial countries' share of world oil consumption is expected to decrease by 4%, from 551 to 511, and noncentrally-planned economies will drop 31, from 191 to 16X. PERCENTAGE INCREASE OF OIL C''NSUMPTION 1985-2000 FORECAST c70 Q 60 LDC 57% 50- 40 - NON-CPE 31% 30 2_-~ __~ WORLD 27% 20 10 0 ____ - - __ _ _--- INDUSTRIAL 19% o L -ve2sF;!rmrnt! - ------------ - CPE 7------------ -----------..............CPE 7% 0-- 1985 2000 Year OIL CONSUMPTION FORECAST 1985-2000 >80 o0 WORLD 72.9 L. ~~~~~~~~~~~~~68.5 63.3 57.4 ...-*----- 0 - ___ ----- 52.2 - - 57.1NON-CPE 61.3 50 ----------- 52.2 E 40 F 46.6 35.9 INDUSTRIAL 37.2 34.2 --- 31 3 21.2 ~~LDC 24.1 20 1 53 18.0212LC4.| 1 0 _ .... ........ ,*........ ..... ........ . .. ........ ................... .. . ... ..... ....... ................ .... 10.8 11.1 11.4 CPE 11.6 0 1985 1990 1995 2000 Year WORLD OIL CONSUMPTTON 1961-2000 1961 1985 2000 70.5% 54.5% 51% - '~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 16.5% 26.7% 33.1% D LDC INDUSTRIAL ] CPE LDC, CPE, NON-CPE, & INDUSTRIAL COUNTRIES AS A PERCENTAGE OF WORLD OIL CONSUMPTION c 100 8 0 E ~ ~~~~~~~~~~NON-CPEI 7 0 - - ._ .......... 90 60 70 30 20 0_ 1 0 _~- --- ------- --- --- --- -- LCP 30 20 1961 1965 1970 1975 1980 1985 1990 1995 2000 Year - 18 - B, Oil Consumption Until the Year 2010 This section extends the forecast from the year 2000 to 2010. Since no attempt has been made by the Bank and most outside organizations to forecast oil consumption beyond the year 2000, our forecast to 2010 is based on a linear eztropolation which assumes that the factors affecting growth from 1990 onward will remain to be constant until 2010. Oil consumption in developing countries is forecasted to increase by approximately 103X between 1985 and the year 2010 (Figure 12), growing from 15 mb/d to 31 =nPid (Figure 13). By contrest, industrial countries' oil consumption is expected to increase by 28Z from 31 mb/d to 40 mib/d. Hence, total oil consumption of noncentrally-planned economies is estimated to increase by 53Z from 47 amb/d to 71 mmb/d. For the same period, consumption of centrally-planned economies will have the lowest growth of 102, from 11 m b/d to 12 mob/d, which decreases total world oil consumption to a growth of 451, from 57 mab/d to 83 mob/d/. In terms of the percentage share of total world oil consumption, as illustrated in Figures 14 and 15, the developing countries' share of world consumption in this same period will increase by llX, from 271 to 382. Such rapid growth in LDC oil consumption offset. decline in other country groups. Industrial countries' share of world oil consumption is expected to decrease by 71, from 551 to 481, and noncentrally-planned economies', by 5Z, from 192 to 141. PERCENTAGE INCREASE OF OIL CONSUMPTION 1985-2010 FORECAST 4.110 c <, ,ioo/ a. 90 0L 103 80 70 60 - NON-CPE 53% 50- 40-- 4 3 1 % - ~ _--- WORLD 45% 30 - 20 _ / _ _ , INDUSTRIAL 28%a 10 E * 1 0 t ¢,X, >S5~~~~-'--~ ..------------~ '' -'-----'------------.....C E10 0 r 7% CPE 1 0% 1985 2000 2010 Year OIL CONSUMPTION FORECAST 1985-2010 , 90 _~90 WWORLD 83. 8 0 7 8.0_.__-- 70 - -Z 7 0 _ 63.3 6 8_ - --- - - - - o 60 61 - - - -- - - - 66.3 NON-CPE 71.2 c~~~5 4 6661. 60 ~50 :-E_ - - S 2.2- S -57. 1 40 46. 359 367.2 38.6 INDUSTRIAL 40.1 240 37.21 .0 _ 34.2 31.3 __-----LDC 31.2 130 _2.7 . 7 21.2~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~' 10.8 11.1 11.4 11.6 11.8 CPE 12.0 0 1985 1990 1995 2000 2005 2010 Year WORLD OIL CONSUMPTION 1985-2010 1985 2000 2010 54.5% 51% 48.1% 1 I. 1 .L15DA 4 O4E -~ LDC mINDUSTRIAL CPE LDC, CPE, NON-CPE, & INDUSTRIALIZED COUNTRIES AS A PERCENTAGE OF WORLD OIL CONSUMPTION .-100 c oW90 __ 0 -------- 80 - --NON-CPE 70 .. NI 60_ > 60 '-*--*---.~~.~ - - -._ INDUSTRIAL 50 _ _ - _ _ 40 2,0- LDC~~~~~~~~~E 21o i --- ---;- CPE- ----- 100pt 1961 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Year - 24 - VI. OIL CO"UWPTIOU BY SECTO Traditionally, oil consumption has been dependent mainly on prevailing oil prices, the economic health of individual countries and the world, and populatior;. However, after the oil crisis in the early 1970s, breakthroughs and transfers of technology have allowed various sectors within a country to increase efficiency in the use of oil and, on the other side of the spectrum, to convert to alternative energy sources. For this study, oil consumption is allocated into three major sectors: industry, transport and other (residential and commercial). It is in the industrial sector, including electric power and ind trial applications, where conversion to coal and natural gas is expected to take place and where nuclear could play a role. There cculd be some but very limited conversion to alternative fuels in the transport sector. Obviously, the degree of conversion and increased strides in efficiency and conservation will depend on price. These possibilities for oil substitution will have an impact on refinery policies, namely the need to upgrade refineries to produce lighter transportation fuels. There aL no official sources, including the Blnk, that allocate crude oil consump.ion by sector on a worldwide basis. For purposes of this study, assumptions have been made based on the readily available oil product statistics for OECD countries and statistics available on selected developing cosutries. Sectoral allocations are based on consumption statistics by oil products. The assumptions for fuel allocation by sector are as follows: LPC - 31.5X Transport, 31.51 Industry, 371 Other Aviation Gas - 1001 Transport Casoline - 100X Transport Kerosene - 141 Industry, 861 Other Jet Fuel - 100X Transport Diesel - 451 Transport, 20X Industry* 35Z Other Residual - 1001 Industry Iaptha - 1001 Industry Refinery Gas - 100X Industry Secondary Products - 100X Industry This section has been cross-referenced into four parts: Part A - Oil Consumption by Sector 1970-1986 Part B - Oil Consumption by Sector Country Groups Part C - Oil Consumption in the Industrial Sector Part D - Oil Consumption in the Transportation Sector - 25 - A. Oil ConsumPtion by Sector 19,0 - 1986 Figure 16 summarizes the breakdown by sector of oil consumption as a percentage of total consumption as well as the changes in these percentages over the sixteen years from 1970 to 1986. Total world averages, composed of industrial countries, LDCs and CPEs, indicate that, although the industrial sector remained dominant in oil consumption during the sixteen-year period, its share decreased by 6Z, from 52Z in 1970 to 462 in 1986. Such decrease reflects the worldwide trend in energy conservation, efficiency improvements and conversion to other energy sources. Increases in the transport and other secto,rs reflect, to a degree, increased mobility, trade and population growth. Most of the world's decrease in oil consumption in the industrial sector can be attributed to the dramatic decrease experienced in the industrial countries where oil consumption in the industrial sector dropped by 122 during this period, from 49Z to 372. Most of the oil consumption was shifted to the transport sector, which increased by 102 from 40X to 502 during the same period. Aside from the factors which caused the decrease in the share of industrial sector oil consumption worldwide, the drop in the industrial countries may be attributed to the "de-indus-rialization" phenomenon, i.e., the move towards a service sector and information-oriented economy coupled with the transferring of manufacturing processes through multinational corporations to lower-cost LDCs. thus, contrary to expectations that transport is the dominant oil- consuming sector in LDCs, the "industrialization" of LDCs, coupled generally with the existence of older and less-efficient plants, have caused their industry sector to be the most oil-intensive. However, due to conservation and efficiency improvements, the industry sector's share of oil consumption has dropped by 5X during the sixteen-year period, from 602 to 552. Nevertheless, the magnitude of oil consumption in the industrial sector indicates the extent to which conversion to other fuels can mitigate its share of total oil cons'imption. In addition, the development of new less energy- intensive technological processes will have an effect. OIL CONSUMPTION BY SECTOR WORLD INDUSTRIAL LDC CPE 1970 52 49 60 58% 1986 *11 46 37 55 61 INDUSTRY S TRANSPORT : OTHER - 27 - B. Oil Consumption by Sector - Country Croups Figures 17-26 provide a more gradual and continuous illustration of the shifts in oil consumption across various sectors for the total world and the various country groups--LDCs, industrial countrieu, CPEs and NON-CPEs--in the 1970-1986 period. The Figures are presented in both millions of barrels per day and as percentages of total consumption. Total World (Figures 17 and 18) World oil consumption has been responsive to the price surges (Figure 17) and, in particular, industry was the most responsive. Both Transport and Other remained fairly stable. Nevertheless, Industry's share is decreasing versus an increasing trend in Transport, towards a more equal proportion between these sectors (Figure 18). LDC (Figures 19 and 20) Oil consumption has fluctuated in response to price changes, however, oil consumption continued to increase (Figure 19) in the developing countries. The growth in Transport and Other was more stable than in the Industry sector. Industrial Countries (Figures 21 and 22) Since the oil price shock in the late 70s, the industrial countries have experienced negative growth in oil consumption and the Industrial sector mirrored this pattern. With the relatively stable growth of Transport, oil consumption in the Transport sector surpassed Industry's after 1980 (Figures 21 and 22) while it has remained steady in the other sector. Centrally Planned Economies (Figures 23 and 24) Oil consumption of centrally planned economies remained fairly constant despite fluctuating prices (figures 23). Within this total consumption, the percentage share of the various sectors has remained unchanged as well. Non-CPE (Figures 25 and 26) Oil consumption of Non-CPEs including developing countries, followed closely total world oil consumption since CPEs remained relatively unaffected by price changes during the 1970-1986 period (Figure 25). However, the increase in Transport coupled with the decrease in Industry has resulted in an even split in their share of oil consumption (Figures 25 and 26). WORLD OIL CONSUMPTION BY SECTOR 1970- 1986 70 * 7 0 F - - 3 0 - _,----____- -__IND US TR Y ....I....................... .... .0 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~00 40 30 __- _- - -- - - -_ __D._ __ R_ 20 ..-* TRANPOR 1 970 1975 1980 1986 Year PERCENTAGE OF OIL CONSUMPTION BY SECTOR TOTAL WORLD ~60 0… _ _…- - _-_-_ 50 -- INDUSTRY - 40 . ---------. - -.*- -- ---------------- - -- - TRANSPORT - ---------------- ---.--- ~~T 30 20 OTHER c 10 1970 1975 1980 1986 Year LDC OIL CONSUMPTION BY SECTOR 1970-1986 >%18 16 o t = ~~~~~~~~~~~~~~~~TOTAL| 14 12~ E f1/ INDUSTRY 8 __- --…___ ____-- 6 __-- TRANSPORT 4 ............-..-.... OTHER 2 __ 1970 1975 1980 1986 Yeor PERCENTAGE OF OIL CONSUMPTION BY SECTOR LESS DEVELOPED COUNTRIES e70 C X 60 ---~~~ ~--____________ ~~INDUSTRY 50 40 TRANSPORT 20 _ OTHER 10 - 1970 1975 1980 1986 Year INDUSTRIAL COUNTRIES' OIL CONSUMPTION BY SECTOR 1970-1986 >50 40 t- 0) c~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ =0 30 o~~~~~~~~~~Yo E .230 20 - ~~~~~- -------TRANSPORT .. .… . . .. . .. .. . .. .. . .. . - --- … --- - - 10 INDUSTRY OTHER 0 1970 1975 1980 1986 Year PERCENTAGE OF OIL CONSUMPTION BY SECTOR INDUSTRIAL COUNTRIES ~60 +,60 1~~~~~~~0) ~~~~~~~TRANSPORT 50 -… ---- --- ------------- 40. _--…- - - - - - INDUSTRY 30 20 OTHER 10 0 1970 1975 1980 1986 Year . , . ; . . CPE OIL CONSUMPTION BY SECTOR 1970-1986 ,,12 /x10o TOTAL 6) 0~1 .0 6 - - INDUSTRY 4 _ _-. TRANSPORT 2 - -------------------------------OTHER c 1970 1975 1980 1986 Year PERCENTAGE OF OIL CONSUMPTION BY SECTOR CENTRALLY-PLANNED ECONOMIES _ 70 C_ 60 _ -----…-- - -_-- -e_ - - - - - INDUSTRY 50 40 30 TRANSPORT 20 OTHER 10 . 1970 1975 1980 1986 Year NON-CFE OIL CONSUMPTION BY SECTOR 1970-1986 >%60 0 n 40 / ~~~~ ~ ~ ~~~~~~~~~TOTAL 0 E 30 INDlJSTRY 20 _,-____--------------------- .. ----~~~~~~~~TRkNSPORT 10. 1 O ~~~~~~~~~~~~~~OTHF:R 0 1970 1975 1980 1986 Year PERCENTAGE OF OIL CONSUMPTION BY SECTOR NONCENTRALLY-E'4LANNED ECONOMIES c 60 C 50… t -- ------------ INDUSTRY 50 --------~ ~ ~ ~ ~~~~~~- 40 _ _ - _ - - - TRANSPORT 30 20 OTHER 10 0~~~~~~~~~~~~~~~~~~~~ 1970 1975 1980 1986 Year - 38 - C. Oil Consumption in the Industrial Sector Figures 27-29 use oil consumption data for various country groups from Part B and cross reference it in order to highlight the industrial and transportation sectors. The Figures are expressed in terms of volume (million barrels per day) and as percentages, i.e. oil consumption in the industrial sector worldwide as a percentage of world oil consumption. Oil consumption in the industrial sectors of total world, total non- CP9u and in industrial countries has experienced fluctuations as a result of oil price changes. Comparatively, LDCs and CPEs have fluctuated less and maintained a more stable growth (Figure 27). However, in terms of the industrial sector's oil consumT%tion as a percentage of total oil consumption, the performances of LDCs, non-CPE and industrial countries are similar i[. the sense that they all experienced fluctuations during the oil price shocks (Figure 28). Notwithstanding the high percentage of industrial oil consumption in LDCs due to the "industrializaton" effect, their industrial sectors are also becoming less oil-intensive. Therefore, focusing on LDC growth compared to the rest of the world in Figure 27, it is apparent that oil consumption in LDC industrial sectors is growing at a faster pace than the rest of the world, despite efficiency gains and any efforts to convert to other sources of energy. CPEs, on the other hand, have not performed in a pattern similar to the rest of the world, perhaps because their economies, not being market oriented, are insulated from the oil price shocks experienced on the world's energy markets. Although the CPE industrial sector's oil consumption did not grow as fast as LDC's it is the most oil-intensive compared to the rest of the world (Figure 28). OIL CONSUMPTION IN THE INDUSTRIAL SECTOR 1970-1986 > 35 0.30 *~~** to,* WORLD 6) o _ , ~20- 1 5k __ __ _-S -_. | 15 _ ..^ _N_ UINDUSTRIAL 10 LDC 5 7 ------------------ --- Oa' --- --------- CPEn 0 1970 1975 1980 1986 Year PERCENTAGE OF OIL CONSUMPTION IN THE INDUSTRIAL SECTOR 65_ C~~~~~~~~~~~~~~~~~~~~~~~~LD _ > _ ~~~~~~~~~WORLD 45 - ax NON-CPE 50 -~ - .. - - - -INDUSTRIAL 45 35 |~~~~~~~~~~~~ - -f - _ _ _ 1970 1975 1980 1986 Year - 41 - D. Oil Consumption in the Transportation Sector Oil consumption in the transportation sector of the various country groups follows an opposite trend compared to consumption in their industrial sectors (Figures 29 and 30). This phenomenon supports the fact that fuel for transport is almost 1001 oil-based, with some exceptions. Also technological breakthroughs and conservation have not increased efficiency gains to a degree that would offset growth in the other variables that influence oil consumption in the transportation sector, i.e. growth in economies, mobility, population and trade. Figure 31 illustrates the motorization trend in several countries compured to their Gross Domestic Product (GDP) per capita. (This graph was developed by International Road Federation and reprinted in Shell's Hatching Supply and Demand for Transportation in the Pacific Rim Countries in the Post 1990s). It shows that the high degree of motorization in countries such as Japan, which also have a high CDP per capita, whereas certain countries (Indonesia, South Korea) bave similar cars/population ratios despite differences in CDP levels (500-5,000 GDP per capita). Nonetheless, the graph illustrates the higher degree of motorization in countries with higher CDPs resulting in higher oil consumption in their transportation sectors. OIL CONSUMPTION IN THE TRANSPORTATION SECTOR 1970-1986 25_- Q - _-- -- WORLD bn 20 - - _, -_ _ _ _ _ 20 -- -- - L. - ,_- - - - - - - - NON-CPE =0 1 5 ._ 1 5 _ ,, _ - .- - _ -- _--.- INDUSTRIAL 1 0 5 - LDC ~~~ = = = ~~~~~~~~~~CPE 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~* 1970 1975 1980 1986 Year PERCENTAGE OF OIL CONSUMPTION IN THE TRANSPORTATION SECTOR .55 INDUSTRAL6~ o50 45 NON-CPE 40 ----..------.- f N O N - C P E WORLD -35 - _--- 30 1 9 70 1 9 75 1 9 80 1 98 6 Y2r e a Cars/1 000 people 550 _ 500 450 400 - 0 0 350 - 0 300 -*- Japan 250 - * 200 - 0 150 * 0 100 - Thailand * Philippines \ * * Indonesia\ * * S 0 South Korea 0 * , 100 1000 10,000 100,000 GDP/capita (US Dollars 1980) Source: International Road Federation - 46 - ENRGY SERIES PAPES No. 1 Energy Issues in the Developing World, February 1988 No. 2 A Review of World Bank Lending for Electric Power, March 1988 No. 3 Some Considerations in Collecting Data on Household Energy Consumptic-. March :988 No. 4 Improving Power System Efficiency in the Developing Countries through Performance Contracting, May 1988 go. 5 Impact of Lower Oil Prices on Renewable Energy Technologies, May 1988 No. 6 A Comparison of Lamps for Domestic Lighting in Developing Countries, June 1988 No. 7 Recent World Bank Activities in Energy, June 1988 PPR Working Paper Series Title Author Date Contact WPS89 Export Quota Allocations, Export Earnings and Market Diversifications Taeho Bark September 1988 C. Cabana Jalme de Melo 61539 WPS90 A Framework for Analysis of Mineral Tax Policy in Sub-Saharan Africa Robert F. Conrad September 1988 A. Bhalla Zmarak M. Shalizi 60359 WPS91 Israel's Stabilization Program Nissan Liviatan September 1988 N. Liviatan 61763 WPS92 A Model of Cocoa Replanting and New Planting in Bahia, Brazil: 1966-1985 Pravin K. Trivedi September 1988 D. Gustafson 33714 WPS93 The Effects of Education, Health and Social Security on Fertility in Developing Countries Susan H. Cochrane September 1988 S. Ainsworth 31091 WPS94 The World Bank's Population Lending and Sector Review George B. Simmons September 1988 S. Ainsworth Rushikesh Maru 31091 WPS95 International Trade and Imperfect Competition: Theory and Application to the Automobile Trade Junichi Goto September 1988 J. Epps 33710 WPS96 The Private Sector and Family Planning in Developing Countries Maureen A. Lewis September 1988 S. Ainsworth Genevieve Kenney 31091 WPS97 Export-Promoting Subsidies and What to Do About Them Richard H. Snape September 1988 J. Sweeney 31021 h S98 Diversification in Rural Asia Agriculture and Rural October 1988 S. Barghouti Development Staff 38408 WPS99 Trade Policies and the Debt Crisis Sam Laird September 1988 S. Torrijos Julio Nogues 33709 WPS100 Public Infrastructure and Private Sector Profitability and Productivity in Mexico Anwar Shah September 1988 A. Bhalla 60359 PPR Working Paper Series Title Author Date Contact WPS101 Measuring the Impact of Minimum Wage Policies on the Economy Luis A. Riveros Ricardo Paredes October 1988 R. Luz 61762 WPS102 Effects of the Multifibre Arrangement (MFA) on Developing Countries! A Survey Junichi Goto October 1988 J. Epps 33710 WPS103 Industrial Portfolio Responses to Macroeconomic Shocks: An Econometric Model for LDCs James Tybout October 1988 C. Cabana Taeho Bark 61539 WPS104 Economic Effects of Financial Crises Manuel Hinds October 1988 L. Hovsepian 32979 WPS105 Securing International Market Access Richard H. Snape October 1988 J. Sweeney 31021 WPS106 Energy Issues in the Developing World Mohan Munasinghe January 1989 M. Fernandez Robert J. Saunders 33637 WPS107 A Review of World Bank Lending for Electric Power Mohan Munasinghe January 1989 M. Fernandez Joseph Gilling 33637 Melody Mason PS108 Some Considerations in Collecting Data on Household Energy Consumption L. Leitmann WPS109 Improving Power System Efficiency In the Developing Countries Through Performance Contracting Philip Yates WPSI1IO Impact of Lower Oil Prices on Renewable Energy Technologies E. Terrado M. Mendis K. Fitzgerald .'PS111 Recent World Bank Activities in Energy Industry and Energy Department :PS112 A Visual Overview of World Oil Markets Kay McKeough January 1989 M. Fernandez Jose Escay 33637 Sompheap Sem