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Things have changed at BP recently. With the Deep Water Horizon disaster, angry American congress, no dividends for the forseable future and a $20Billion fund for clean up operations BPs share price has plummeted in recent weeks. The darling of the UK pension fund managers may not recover for some time.

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BP's marketplace is the world market for energy. This is a long-term growth market with demand expected to rise at an average 2% pa compound. Demand for natural gas has grown faster since it is a clean convenient fuel and usually cheaper, on an energy-equivalent basis, than oil. It has won market share, mostly from coal. For the last six years the booming Chinese demand for energy could not be met immediately by imports of oil and natural gas since it takes years to build the necessary infrastructure, so it expanded its production and consumption of coal by over 500mtoe, roughly 80%which was more than the total increase in world oil or natural gas consumption. So, although China increased gas consumption by 133% and the share of Chinese demand met by natural gas grew by more than one-third, its share of total world energy demand has only increased by 0.1% to 23.7% in these six years while in the same period coal increased its share of the total world market from 25.4% to 28.4%.

There are several major projects to supply natural gas to China that are expected to come on stream in the next few years, and once these are in operation the human cost of mining coal and the environmental damage caused by burning it are expected to result in coal’s share of the energy market declining once again.

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