A CLIMATE change agreement in Paris designed to eliminate fossil fuel use could have marked the beginning of the end for oil. An obliging fall in the price of Brent on Dec 14 suggested that world demand for the black stuff is continuing to abate. Anti-carbon measures agreed may have an impact, eventually. For now, with crude trading near 11-year lows of around US$37, it will be harder to wean the world off its hydrocarbon habit.

Short-term prices aren't falling because of Paris, but because they continue to reflect the fact that producers - including Opec nations - are pumping in volumes that outstrip annual consumption by 1.8 million barrels per day (bpd). International Energy Agency figures show that oil is still crucial for the global economy. Total demand reached 95.3 million bpd in the fourth quarter, an increase of 2.4 million bpd in just two years.

But just as low prices now will encourage the continued use of oil, the supply and demand balance can quickly change. Growth in world demand for oil is expected to slow to around 1.2 million bpd next year just as investment into new supplies is also being cut. Rystad Energy, an oil industry consultant, estimates that US$250 billion has been removed from oil exploration and production budgets this year. It believes that a further US$320 billion of savings could be made in 2016 should prices remain low.