China, India Middle East May Spur Another Oil Price Spike

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"Five sectors within China. . .will account for more than 25% of global energy demand growth."

McKinsey warns that oil prices could spike anew as soon as the world economy recovers, paced by growing demand in China, India and the Middle East.

"In the long term, our research suggests continued rapid growth in overall demand for energy, further boosting the importance of efficiency efforts," McKinsey says in a new analysis.

From 2010 to 2020, assuming a moderate GDP downturn scenario, demand for energy will grow by 2.3% a year, nearly a full percentage point more than projections for 2006 to 2010.

"More than 90% of this demand expansion will come from developing regions, with China, India, and the Middle East leading the way. Five sectors within China—residential and commercial buildings, steel, petrochemicals, and light vehicles—will account for more than 25% of global energy demand growth. India's light-vehicle, residential-buildings, and steel sectors and the Middle East's light-vehicle and petrochemicals sectors will be other notable contributors to the growing demand for energy."

"Lower oil prices and overall demand for energy because of the economic downturn are a temporary blessing that should not lull policy makers and businesses into a false sense of complacency," McKinsey concludes. "Given our projections, it is essential that they step up their efforts now to secure that energy is used in more efficient ways."

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