Late last year the US Energy Department came to the conclusion that global consumption of oil would probably fall by 450,000 barrels a day in 2009, the first time in more than 30 years that demand will decline for two consecutive years.

As a result of the global recession, the price of oil has fallen more than 70 percent since its peak this summer as demand dropped in the United States and other industrialized countries. Idle production capacity has risen to its highest level in six years, now standing at over five million barrels a day.

Output cuts agreed by OPEC in December were intended to push oil prices back up to levels more acceptable to the producers but a further reduction is needed because demand is falling faster than expected. Long lead times in the oil supply chain mean the impact of lower production will not be noticed until later this quarter when the volumes of oil arriving at the ports should start to fall. In the meantime US stockpiles are virtually overflowing and some US oil companies are cutting domestic oil production and slashing drilling activity.

Officials from the Organization of Petroleum Exporting Countries which supply 40% of the world’s oil will meet in Vienna on 15th March. There is a great deal of debate around whether they are likely to agree further production cuts.

Oil prices fell sharply again this Monday amid more signs that the global recession is deepening in the world's major energy-consuming countries. Crude dipped below the now psychological barrier of $40 a barrel in intraday trading in New York. With a fall of more than 10%, it settled at $40.15 per barrel (compared to last summers peak of $147.27). An analyst at Alaron Trading in Chicago told reporters that if current economic conditions linger, he could see oil pries falling to $25 per barrel within a few months.

Natural gas prices fell less severely than oil, buoyed up by the extreme cold weather in the USA this winter. On monday the price declined 4.6 cents to settle at $4.152 per 1,000 cubic feet for April delivery.

In the UK, National Grid is reporting that demand for gas in Britain has fallen by four percent so far this winter, compared with the same period last year. That's a significant fall when you consider that this has been the coldest winter since 1995. The fall in industrial activity because of the economic downturn led National Grid in November last year to revise down its forecasts for electricity demand and further trim its outlook in January. Many industries in Britain which use gas as a raw material have cut back because of falling demand for their own goods.

Share prices for many oil and gas companies declined sharply on Monday and the Dow Jones industrial average closed below 7,000 for the first time in more than 11 years. Some energy companies recorded fall in value of around 20%. Oil service stocks fell on average 9.3% and exploration and production stocks 11%. Commodities had the biggest drop since October as the deepening global recession slashed demand. The Reuters/Jefferies CRB Index of 19 raw materials fell 5.3% the biggest decline since October 10th when it fell 6.6%, the largest since the debut of the index in 1956.

Nobody knows how long the economic downturn will last but perhaps, for the planet at least, there is a silver lining if the collapse in growth can do what human nature has seemed so far unwilling to do on it's own accord and cut humanities appetite for fossil fuels.