Oil demand stagnates but not prices.

Oil prices have skyrocketed despite the fact that world oil demand grew just one percent in 2007, according to a study by the Worldwatch Institute, Washington, D.C. Contrary to published reports, the new era of $100-plus-a-barrel oil is not caused by soaring demand, but by inadequate global supply.

Oil prices nearly doubled during 2007, from just above $50 a barrel in January to nearly $100 at year's end. Meanwhile, world crude oil production actually fell from 73,800+000 barrels per day in 2005 to 73,200,000 barrels a day in the first 10 months of 2007. "It's too early to say definitively that oil production has reached its all-time peak, but it's clear that the world is having a hard time expanding production to meet even a modest growth in demand," maintains Christopher Flavin, president of Worldwatch.

The U.S. remains the world's largest oil-consuming nation, using almost one-fourth of the global total at a rate of 20,700,000 barrels daily, but rising oil prices discouraged greater demand and left U.S. oil consumption virtually unchanged for the third year in a row. Organisation for Economic Cooperation-Europe and Japan consumed 15,400,000 barrels and 5,000,000 barrels a day, respectively. Chinese oil consumption increased 5.5% in 2007 to 7,700,000 barrels per day--accounting for half the growth in global demand for the year. China's oil use nearly has doubled in the past decade and now accounts for nearly nine percent of the world total.

Geological and political factors...