MIRACLE: India’s oil consumption has come down

BHAMY V. SHENOY writes: British Petroleum (BP) has just published its review of World Energy Report for 2005 which serves as the bible for the energy industry.

The most surprising statistic in the report is the 3.7% decrease in annual oil consumption for India in 2005 versus 2004.

India’s total commercial primary energy consumption has gone up from 376.1 million tons in 2004 to 387.3 million tons in 2005, which is an increase of 3.0%. This increase is mostly due to an increase in gas consumption of 3.5 million tons of oil equivalent (mtoe), coal of 9.2 mtoe and hydro electricity of 2.7 mtoe. Oil consumption has gone down by 5.5 million tons.  

When crude oil price was increasing during 2005, several energy experts and institutions such as IEA pointed out to the increasing oil appetite of China and India as one of the significant causes.

Miraculously, while China’s oil consumption has indeed gone up in 2005 while India’s has declined.

If so, this is the best-kept secret of Indian economy.  

If India’s oil consumption has indeed gone down while it has registered an impressive GNP growth of about 7 to 8% per year, we need to rejoice about the event and learn how to repeat it again this year.

During the last ten years, oil demand has been continuously increasing from 75.2 million tons in 1995 to 120.2 million tons in 2004 registering an average annual increase of 5 million tons.  

On the other hand if this anomalous situation is because of the faulty statistics or even worse because of smuggling, then we need to worry.

The reason given by BP to explain India’s decline in oil consumption is the possible replacement of oil by coal and natural gas. Coal and gas are used mostly to generate electricity in large plants where oil is not used. Also there are no extensive gas distribution facilities to use imported LNG in different parts of India.

For these reasons, this explanation may not provide convincing argument. Let us hope for a better explanation from the government for this happy development on
India’s otherwise gloomy energy scene.