Olympics Clean Air Push Dampens Beijing Fuel Demand
Date: 12-Oct-07
Country: CHINA
Author: Jim Bai
The sporting gala may draw tens of thousands of foreign visitors, but despite jet fuel for some extra flights, plans to clear cars from the capital's roads mean national oil demand is unlikely to get the special spur many expected.
Beijing, which even at peak times accounts for under 5 percent of the country's fuel use and where demand is growing slower than the national average, plans to encourage citizens to stay home or to catch a bus or subway during the Olympics.
Officials hope the measures will calm worries about athletes' health in a city plagued by serious air pollution, and improve visitors' first impressions of Beijing's often grid-locked streets and leaden, smoggy skies.
"Driving curbs, renewable energy promotion as well as better public transportation will dent oil demand in the short term," said Han Xiaoping, a senior vice president of energy consultancy Beijing Falcon Power Ltd.
Traders keep a close eye on oil demand growth in China, the world's second-largest consumer, because of concern extra imports could tighten world markets already trading above US$80 a barrel.
In a four-day test in August, Beijing ordered 1.3 million cars, or about 40 percent of the total, off the roads.
An analyst with a Chinese oil major estimated that this cut
fuel consumption by some 3,800 tonnes a day, or more than 20 percent of the city's average daily demand of 17,000 tonnes.
An advisory group on air quality has suggested driving curbs should be in place during the whole games, including the Paralympic Games, a period of nearly two months.
The metro system is also being expanded and a sixth of buses are being converted to run on natural gas, while a priority supply of power should preclude the brownouts that in recent years fuelled demand from individual diesel-fuelled generators.
"Jet fuel demand is likely to increase fairly quickly as more travellers fly to Beijing," said an analyst at top oil firm China National Petroleum Corp (CNPC) who declined to be named.
"But gasoline and diesel use may not rise noticeably because of driving restrictions," he added.
China's jet fuel demand in the year through August was less than one-tenth that for diesel and gasoline. So even if the Games bring a dramatic increase in traffic through a vast new terminal at Capital International Airport, it would likely be offset by taking just a modest percentage of cars off the road.
The city's top economic planners are not concerned about a surge in fuel sales, which expanded less than 2 percent in the first half of 2007, while nationwide diesel and gasoline demand grew 7 and 3 percent respectively.
"We expect demand for fuel, as well as thermal coal, will not change much during the Games," the Beijing Development and Reform Commission said in an email response to Reuters' questions.
But they still have to contend with more than 1,000 new cars being added each day to roads in Beijing, helping fuel a strong growth trend nationwide.
The latest Oil Market Report said the International Energy Agency sees Chinese oil product demand rising 5.7 percent to 8 million bpd in 2008, against a 5.9 percent growth to 7.6 million bpd this year.
AMPLE ELECTRICITY, GAS
Demand for electricity during the Olympics is expected to surge up to a quarter beyond the record levels seen this summer, said network operator North China Grid.
But Beijing rarely suffers brownouts even though local generators meet less than half its needs, as the grid prioritises electricity flows to the country's political and cultural heart.
And for next summer, the firm will boost reliability to levels seen in Tokyo, Chairman Ma Zonglin said recently, with several new channels to supply Beijing and a boost in regional capacity to 145 GW, some 20 percent above estimated demand.
"Beijing does not have to run independent diesel-fired generators as it will have ample power supply even when the capi