World Energy Outlook 2006

growth marginally, pushing demand down further. 13 In 2030, the
international crude oil price, for which the average IEA import price serves
as a proxy, is $19 higher in year-2005 dollars and $33 higher in nominal
terms (assuming annual inflation of 2.3%) than in the Reference Scenario –
an increase of about 34%.
As a result of higher prices and lower GDP growth, the average annual rate of
global oil-demand growth over 2005-2030 falls from 1.3% in the Reference
Scenario to 1.1% in the Deferred Investment Case. By 2030, oil demand
reaches 109 mb/d – some 7 mb/d, or 6%, less than in the Reference Scenario
(Figure 3.13). This reduction is equal to more than the current oil demand of
China. Higher oil prices encourage consumers to switch to other fuels, use
fewer energy services and reduce waste. They encourage faster improvements in
end-use efficiency. In the transport sector, they also encourage faster
deployment of biofuels and other alternative fuels and technologies, such as
hybrids. The size of these effects varies among regions. It is highest in non-
OECD countries, because the share of non-transport uses in final demand
(which is relatively price-elastic) is higher there than in the OECD and because
the share of taxes, which blunt the impact on demand of higher international
oil prices, is generally lower.
mb/d
Figure 3.13: Reduction in World Oil Demand and OPEC Market Share
0
–2
–4
–6
–8
2005 2010 2015 2020 2030
Reduction in world oil demand
Deferred Investment Case (right axis)
Note: Includes NGLs, condensates and processing gains.
50%
45%
40%
35%
30%
Reference Scenario (right axis)
13. See IEA (2005) for a detailed explanation of the methodology used to quantify the effects of
lower investment on oil demand, supply and prices.
108 World Energy Outlook 2006 - THE REFERENCE SCENARIO
OPEC market share
© OECD/IEA, 2007