The literature on OPEC energy policy has focused primarily on its production and export potential. The rapidly increasing domestic demand for petroleum products in OPEC countries has often been ignored. This study estimates domestic demand for petroleum products by the major OPEC economies and forecasts consumption trends under alternative assumptions regarding economic growth and price deregulation. It concludes that product demand is generally price and income inelastic and thus domestic consumption in OPEC will continue to grow rapidly, even if domestic prices are raised closer to world levels in the near future.

In 1986, world oil prices declined sharply. Lower oil prices have been favourable to economic growth and price stability in Asia. However, oil consumption has also been growing rapidly in developing Asian countries including those dependent on imported oil. The increasing dependence on oil as a source of energy since 1986 is a striking reversal of the previous trend. In their pursuit of rapid industrialization, Asian countries have neglected energy conservation and diversification strategies. Unless energy policy is redirected, countries like Korea, Thailand and the Philippines could be seriously hurt by a sharp rise in oil prices. An increase in oil prices is almost inevitable in the next few years.

China is the largest energy user in Asia and the second largest in the world after the US. This paper documents substantial changes of the structure of China's energy use over the past decades. It explores the puzzling phenomena of China's low gross domestic product elasticity of energy consumption. Econometric analysis applying the AutoRegressive Integrated Moving Average model finds that factors such as institutional reforms and structural change can account for a substantial fraction of the downward impacts on the elasticity level. The paper also studies the future energy growth and energy security issues in China, and examines the regional and global impacts of China's rapidly growing energy consumption.

No abstract