By LIAM DENNING
After a decade or so of relying on Chinese growth to fuel
rising prices, energy bulls can look forward to... another two
decades of relying on China.
BP released its latest long-term outlook on global energy
trends Wednesday. Overall, investors in fossil fuels -- oil,
natural gas and coal -- will be cheered. Annual rates of growth
in demand are moderating, down only a bit from 2011's 87%.
China remains the make-or-break factor, though. Between 2000
and 2011, when fuel prices boomed, China accounted for 55% of
the growth in global energy consumption. Under BP's
assumptions, China's share of extra demand between 2011 and
2030 is 43%.
That is less, but still critically large. This is especially
the case when you consider that the Middle East and the former
Soviet Union are also becoming more important in the mix of
energy demand. As major energy exporters, they are tied to
China's continuing success. If it weakens, so does growth in
their economies -- and their own energy consumption.
Taken together, the three regions accounted for 69% of
global energy-demand growth between 2000 and 2011. BP's projections still have them at 57%
out to 2030.
Of the three fuels, coal is the most dependent on China,
with the country set to account for 61% of global demand growth
out to 2030. For oil, it is 43%; for gas, just 25%.
China's continuing importance may be a source of comfort for
investors (hey, you go with what you know, right?) But the
country's model of breakneck investment in infrastructure is
showing signs of strain, and not just in economic terms: Take a
look at the recent footage of Beijing's hazardous smog.
For energy bulls, dependence on China could yet turn from a
rock of support to a slippery slope.
Dow Jones Newswires