Processing Magazine

BP: Oil demand surge was a surprise

June 12, 2008
The Associated Press is reporting that BP PLC''s chairman said recently that oil companies didn''t make the necessary investments to clear the current supply bottleneck because they never expected demand for oil to surge so rapidly.

Oil prices have quadrupled in the last seven years, spurred in part by growing demand from China and other booming developing countries. Prices hit a record high June 6 when traders paid $139.12 a barrel.

Peter Sutherland, chairman of the oil giant''s board, said recent high prices were not driven by market speculators, as some think, or by fears that oil is running out.

Sutherland said that lack of investment happened gradually over many years, occasionally when oil prices were too low.

He also blamed high prices on the imminent threat feeling that supplies were limited on political instability in oil producing nations Iraq, Nigeria, Venezuela and Iran and fears that Russia and Middle Eastern nations were using energy as a political weapon.

Europe is seeking to develop more renewable energy sources as part of its goal to cut greenhouse gas emissions and lessen its dependence on imported energy.

Sutherland said he expects existing proven oil resources to last at least another 43 to 45 years with significant finds still to be located.