The U.S. Energy Department and the International Energy Agency both lowered their global oil consumption forecasts for this year because of surging prices but said demand continues to accelerate in developing nations.
The downward revision follows a reduction this month in fuel subsidies by several developing countries that have succumbed to record oil prices. However, the Energy Department and IEA also said demand for oil and fuel continues growing in those regions, particularly in China. Reconstruction work in the aftermath of this year's devastating earthquake will boost Chinese oil demand by 5.5 percent this year, a slightly higher forecast than in previous reports, the IEA said.
The reports raise even more questions about whether the world has inched closer to a tipping point at which high energy prices would force changes in behavior or economic policy.
“There's a debate on that,” said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. “Some would say we're already there.”
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Protests are erupting simultaneously from the U.S. and Asia to Europe, as fuel prices cut deeper into the money people need for food and other essentials.
Oil consumption is falling more than expected in the industrialized world, according to the monthly report from the Energy Department's Energy Information Administration. Consumption in nations belonging to the Organization for Economic Cooperation and Development, like Japan, Germany, Britain and the U.S., is now expected to fall by 240,000 barrels a day in 2008. Last month, the department forecast that consumption would be unchanged from last year.
In its own monthly report, the Paris-based IEA, an energy adviser to Western industrialized nations, cut its demand growth forecasts, projecting that global demand for petroleum products such as gasoline, diesel and heating oil will grow by 0.9 percent, or 800,000 barrels a day, in 2008. That's down from the 1.2 percent, or 1 million barrels, the IEA forecast earlier this year.
The Energy Department now expects U.S. gas prices to peak at a monthly average price of $4.15 a gallon in August. That is well above last month's peak forecast of $3.73 a gallon, then expected in June. On Tuesday, the average national price of a gallon of regular gas rose 2 cents to $4.043, according to a survey of stations by AAA and the Oil Price Information Service.
Oil prices surged to a record of $139.12 last week on the New York Mercantile Exchange. On Tuesday, oil futures traded near $131 a barrel on the Nymex.