Washington (Platts)--13Oct2009/540 pm EDT/2140 GMT

Oil demand from developed economies such as the US and the European Union peaked in 2005, IHS Cambridge Energy Research Associates said in a report Tuesday.

Though demand for oil will grow modestly in the coming years from these economies, the level of oil consumption will never reach its 2005 peak, according to the report.

Demand from the 30 countries in the Organization for Economic Cooperation and Development has dropped 3.7 million b/d since then, said CERA, but will only grow 900,000 b/d out to 2014.

Key factors such as demographic changes, new regulations, and growing markets for renewable and electricity transportation technologies will all contribute to keep oil demand below its high point, the report said. CERA Chairman Daniel Yergin said the ongoing recession was a factor for this trend to continue, but not for it to begin. "The economic downturn has been masking a larger trend in the oil demand of developed countries," he said. "The fact is that OECD oil demand has been falling since late 2005, well before the Great Recession began."

OECD oil demand currently accounts for 54% of global oil demand, according to CERA. Of that total, petroleum demand for transportation made up 60% of OECD demand, but that number has fallen sharply in recent years. Government intervention has played a major role as greater automobile fuel economy measures, as well as mandates for renewable energy, tamp down petroleum demand.

Demographic changes have a large impact as well including a leveling of women in the workforce and how many vehicles each family owns in these developed countries. "Vehicle ownership rates in developed countries have reached a 'saturation' level while aging populations with low to negative population growth suggests a flattening of demand for mobility," the report said.

The share of global energy consumption the OECD represents will gradually get smaller as developing countries like China, India, and Brazil ramp up their petroleum consumption. These countries are expected to increase oil demand 4.4 million b/d out to 2014, much higher than the 900,000 b/d anticipated for developed countries.

Going out to 2030, CERA said that oil will still be a major energy commodity, but that less dependency could help their economies.

"Peak demand will dampen the rate of increase in dependency on oil imports," the report says. "It likewise could also help make economic growth in those countries less susceptible to oil price shocks. Finally, peak OECD demand could counteract the expected rapid demand growth in the developing world."

-- Alexander Duncan, alexander_duncan@platts.com