The International Energy Agency lowered its world oil demand forecast on Friday by 1 million barrels a day, to 83.4 million barrels a day, reports the Wall Street Journal. That's 2.4 million barrels a day lower than the 2008 average.
This will mark the second year in a row in which global oil demand has contracted, but the IEA says that "it doesn't expect a repeat of the four-year consecutive drop in demand seen in the early 1980s."
Is the IEA also taking on the role of economic forecaster? Declining demand for oil directly follows the contracting global economy. If demand starts to grow in 2010 or 2011, that implies some kind of economic recovery. Which I suppose we should find reassuring.
But the IEA also notes that investment in "new drilling projects" has collapsed, which raises the very clear possibility that once demand does start to grow again, supply will not be able to ramp up correspondingly, oil prices will spike again, and what is likely to be a very shaky economic recovery will get knocked down to the mat, again.
Which reminds us, again, why getting new energy legislation passed as quickly as possible is critical to the longterm economic health of the United States... and the rest of the world.