New Energy Buying Problems

Fatih Birol, chief executive of China’s energy agency, said he expected a sharp recovery in demand, which would mean higher energy prices in other markets.

China’s reduced energy consumption last year prevented world prices from going up more after Russia invaded Ukraine. This let Europe and the United States avoid having to lower Russian energy imports.

China’s reduced energy needs, combined with an unusually warm winter, mean Europe “looks like it’s not right this winter,” Mr. Birol said in an interview. Many experts expected energy costs to rise so high that European businesses would collapse and a deep recession would follow.

He added that “next winter could be more challenging” because the weather could be colder. Western sanctions would further reduce Russian fuel exports due to the war, and China’s economy would recover.

China Lowers Consumption

Chinese consumption last year fell by only a small amount, but that’s because China has been the world’s leading importer of oil and gas in recent years. Most energy experts say China will remain the number one importer for at least several more years.

China’s oil demand this year fell 390,000 barrels a day, or 3%, the first drop since 1990. Meanwhile, total world oil demand rose 2 million barrels a day, or 2%, the energy agency said. The world’s recovery from the Covid-19 pandemic can largely explain the difference, while the Chinese government kept many of its cities under lockdown.

The Energy Agency recently released a forecast predicting that global oil demand will increase by two million barrels per day this year, with China accounting for half of that increase.

The agency reported that China’s demand for natural gas fell 0.7 percent in 2022, the first decline since 1982. Imports of liquefied natural gas fell by 21 percent, so China dropped to second place among importers, behind Japan. The United States is a major gas exporter to China but has shifted much of its Asian business to Europe over the past year.