In the IEO2010 Reference case, which does not include prospective legislation or policies, world marketed energy consumption grows by 49 percent from 2007 to 2035. Total world energy use rises from 495 quadrillion British thermal units (Btu) in 2007 to 590 quadrillion Btu in 2020 and 739 quadrillion Btu in 2035.

The global economic recession that began in 2008 and continued into 2009 has had a profound impact on world energy demand in the near term. Total world marketed energy consumption contracted by 1.2 percent in 2008 and by an estimated 2.2 percent in 2009, as manufacturing and consumer demand for goods and services declined. Although the recession appears to have ended, the pace of recovery has been uneven so far, with China and India leading and Japan and the European Union member countries lagging. In the Reference case, as the economic situation improves, most nations return to the economic growth paths that were anticipated before the recession began.

The most rapid growth in energy demand from 2007 to 2035 occurs in nations outside the Organization for Economic Cooperation and Development1 (non-OECD nations). Total non-OECD energy consumption increases by 84 percent in the Reference case, compared with a 14-percent increase in energy use among OECD countries. Strong long-term growth in gross domestic product (GDP) in the emerging economies of non-OECD countries drives the fast-paced growth in energy demand. In all non-OECD regions combined, economic activity—as measured by GDP in purchasing power parity terms—increases by 4.4 percent per year on average, compared with an average of 2.0 percent per year for OECD countries.

The IEO2010 Reference case projects increased world consumption of marketed energy from all fuel sources over the 2007-2035 projection period. Fossil fuels are expected to continue supplying much of the energy used worldwide. Although liquid fuels remain the largest source of energy, the liquids share of world marketed energy consumption falls from 35 percent in 2007 to 30 percent in 2035, as projected high world oil prices lead many energy users to switch away from liquid fuels when feasible. In the Reference case, the use of liquids grows modestly or declines in all end-use sectors except transportation, where in the absence of significant technological advances liquids continue to provide much of the energy consumed.

Average oil prices2 increased strongly from 2003 to mid-July 2008, when prices collapsed as a result of concerns about the deepening recession. In 2009, oil prices trended upward throughout the year, from about $42 per barrel in January to $74 per barrel in December. Oil prices have been especially sensitive to demand expectations, with producers, consumers, and traders continually looking for an indication of possible recovery in world economic growth and a likely corresponding increase in oil demand. On the supply side, OPEC’s above-average compliance to agreed-upon production targets increased the group’s spare capacity to roughly 5 million barrels per day in 2009. Further, many of the non-OPEC projects that were delayed during the price slump in the second half of 2008 have not yet been revived.

After 2 years of declining demand, world liquids consumption is expected to increase in 2010 and strengthen thereafter as the world economies recover fully from the effects of the recession. In the IEO2010 Reference case, the price of light sweet crude oil in the United States (in real 2008 dollars) rises from $79 per barrel in 2010 to $108 per barrel in 2020 and $133 per barrel in 2035.