Chart of the Week: Shifting Energy Demand

Global energy consumption fell for the first time in nearly three decades last year as slowed manufacturing and idled factories drove consumption lower. Overall, global energy consumption fell 1.1 percent in 2009, the largest decline since Ronald Reagan’s inauguration.

Contracting consumption in the developed world was the largest driver of the decline.

This week’s chart breaks down share of global energy consumption by developed markets—the U.S., Western Europe, Japan and others represented by the Organization for Economic Co-Operation and Development (OECD)—and the rest of the world. You can see that the OECD’s share of global energy consumption has tumbled from nearly 70 percent in 1965 to well below 50 percent last year.

Meanwhile, the lights are shining bright in emerging markets. Emerging markets’ share of global energy consumption has more than doubled since the 1960s. More importantly, the speed of advance by emerging markets has accelerated the past few years, stealing away more than a 10 percent share of the total since 2003.

Credit Suisse expects oil demand to grow 9.3 percent in China, 4 percent in Latin America and 4.4 percent in the Middle East in 2010. In contrast, it expects oil demand to contract by nearly 2 percent in Western Europe and manage only meager growth in North America.

The global recession has allowed emerging markets to gain ground as activity in the developed world slowed to a crawl, but the long-term trend is a significant one and will likely continue. Improving economic conditions in the developing world means more people have more money to spend on personal cars and electricity for their homes. Also, a wealthier population consumes more goods and electronics which leads to more manufacturing activity and increased energy demand.

About Frank Holmes 263 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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