Global energy revenue is closely linked to general economic activity, as energy consumption is a fundamental component of both industrial activity and individual consumer behavior. Gross domestic product (GDP) is a strong driver of energy revenue exposure, with factors such as industrialization and regulation also having substantial roles. Currency fluctuations had a strong impact on relative growth rates in 2015, and these forces are expected to continue playing a role in 2016.
Contributions by Geography
In 2015, 18.3% of all global energy sector revenues came from the United States, the largest contributing country. China followed closely behind at 18%. Japan, India, Russia, the United Kingdom, Brazil and Canada completed the top eight in that order, ranging from 6 to 3% of global revenue. These values correspond similarly to nominal GDP ranking, with the United States, China and Japan representing the three largest economies in the world. The most significant drivers of energy consumption are industrial activity, transportation and electric power, all of which rise and fall like GDP. Energy revenues are less exposed to Germany, France and Italy in proportion to GDP, indicating lower energy consumption in those countries due to societal convention and regulatory measures. Russia and India have energy revenues disproportionately high, relative to GDP.
Asia Pacific was the largest regional contributor to global energy revenue, with 36% of total consumption. This region contains a large portion of the world's population, several developed economies that engage in substantial consumption and some lower-income countries with manufacturing hubs that consume disproportionately high amounts of energy relative to GDP. The Americas are the second-highest region for energy revenue exposure, at 31.5%. The United States, Brazil and Canada are all among the highest revenue sources, and other large countries such as Mexico, Argentina, Colombia and Venezuela also have material contributions. Europe represents 26.8% of energy revenue, despite having a very large and wealthy population. Africa and the Middle East have relatively low GDP and industrial output, so the region only produces 5.6% of global energy revenues.
In 2015, 56.9% of global energy revenues were from developed economies, with emerging economies accounting for 37.3%. This supports the view that energy consumption is linked closely with economic output, as developed economies in North America, East Asia and Europe contribute a much higher proportion of revenues. Industrialized emerging economies such as China, Brazil and India are important drivers of energy consumption, as evidenced by the large and growing influence of this group.
Changes Over Time
In 2015, the U.S. share of global energy revenue fell 17% from the prior year, marking a reversal of the slight increase from 2013 to 2014. Canada's share fell 16.5% in 2015 after being roughly flat in 2014. The United Kingdom experienced 6% contraction in 2015, the second straight annual decrease. The rest of the top eight contributors to global revenue had increases in 2015. Specifically, China's contribution grew 19.1%, India's grew 16%, Russia's grew 13%, Brazil's grew 9% and Japan's grew 3%.
Several factors influence these disparate growth rates. The volume consumed is a major factor, and this varies with industrial output and individual consumption rates, though the actual volume consumed tends not to be extremely volatile from year to year. Another major factor is currency fluctuations, which can be substantial, as the data from each country is translated into U.S. dollars. The strong dollar was a major factor that drove the year-over-year (YOY) decline as energy prices fell. Other countries experienced substantial currency depreciation, inflating their growth rates.
The Asia-Pacific region is expected to grow from 36% of global revenue to 38.8% of revenue in 2016, extending its position atop world energy revenue contributions. Europe's contribution is expected to expand 130 basis points, while the Americas region is forecast to contract four percentage points to 27.5%, falling to third among regions. Currency exchange rates are likely to play a major role in these dynamics.
