Demand for oil will fall by largest margin in 25 years

Gloibal demand for oil in 2009 will fall by the largest amount for 25 years, according to the chief energy economist of Deutsche Bank.

Adam Sieminski said oil prices could hit a low of $30 a barrel next year, a fall of a quarter from today’s price, because of the sickly global economy. He forecast an average price of $47.5 for the whole year for oil traded in New York. Deutsche Bank predicts global demand will contract by 1 per cent, or 1 million barrels a day, three times the fall seen this year and the biggest since 1983.
If Sieminski is right about lower prices next year, it is good news for motorists in particular. Households should also see lower utility bills as gas prices are index-linked to the cost of oil. A continued slump in oil and gas prices, however, could make the cost of using alternatives to fossil fuels to generate electricity, such as wind farms or nuclear power, uneconomic. This will make meeting Britain’s climate change targets even harder.

Guardian