The Economist, Jun 14th 2012, 10:33 by S.W.
THE world's energy markets in 2011 are like one of those pictures where, depending on how you tilt it, you see two different images. According to BP's annual statistical review of world energy, released on June 13th, all was calm. The world economy grew by 3.7%, roughly the average of the previous decade's expansion. Energy consumption, closely linked to economic activity, grew by 2.5%, much as it has over the past ten years.
But looked at from a different angle, energy markets went through a year of much change, the report also points out. Natural disaster and politics conspired to buffet energy supplies. The Fukushima disaster shut down Japan's nuclear power generators. Oil prices averaged more than $100 a barrel for the year as Libya's civil war and fears over the spread of the Arab Spring hit or threatened supplies. And shifts in the global economy changed consumption patterns. Rich countries again consumed less; so energy demand declined for the third out of the past four years. Developing countries continued to grow fast; the Chinese added an extra 8.8% in GDP—growth which increased the country's energy demand by as much as Britain's entire energy use.
In the BP report, Christof Rühl, the firm's chief economist, describes how the markets responded. Saudi Arabia pumped more crude to make up for Libya, liquefied gas (LNG) bound for Europe went to Japan (where it fetches a far higher price, to make up for the nuclear shortfall) and coal from across the Atlantic plugged Europe's energy gap (where high prices and a warm winter had suppressed demand). America's shale-gas bonanza has led to the rapid substitution of gas for coal in the power sector, freeing up plenty of the black stuff for export.
These shifts show how powerless governments are in the face of big shifts in international energy flows. The European Union, at pains to reduce carbon emissions to preserve the environment, saw them shift down only slightly despite a big drop in energy consumption; cleaner gas disappeared to Japan and power generators were forced shovel more dirty coal from America and Colombia into their furnaces. America, with no such commitments to greenery, saw carbon dioxide emissions fall by 450m tonnes over the past five years, more than in any other country. This was thanks to a rapid switch from coal to gas in power stations, which simply happened because the latter has become dirt cheap. Abundant gas from shale beds is America's golden goose.
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