TOKYO (Bloomberg) -- Japan’s primary energy demand may fall 0.2 percent in the fiscal year starting April 2008 as record crude prices prompt energy-saving at homes, offices, and factories.

Demand for primary energy such as electricity, natural gas, and refined oil products, is forecast to decrease in the next business year, compared with an estimated 0.2 percent rise in the year that started April 2007, according to a report Wednesday from the Institute of Energy Economics Japan, or IEEJ.
Consumers, manufacturers, and office building owners in the world’s second-largest economy are making more efforts to conserve energy as record crude prices push up costs of running cars, air-conditioners, kerosene stoves, boilers, and electricity generators. Japan, a signatory to the Kyoto Protocol, is promoting energy saving to cut greenhouse gas emissions.
Demand for petroleum products is projected to decline 2.5 percent in the next business year following an expected 0.9 percent fall in the current fiscal year, the energy think tank said in the report.
“Households and industrial users are shifting to alternative fuels from oil products,” Shigeru Suehiro, senior economist at the IEEJ, told reporters in Tokyo. “Automotive fuel consumption will probably drop, partly because of a rise in fuel-efficient cars.”
-------------------------- Bright gas outlook
The growth in demand for natural gas in the next year is forecast at 3.6 percent as a result of the switch from petroleum products, the report shows. High oil prices are driving the nationwide shift to cheaper gas, Suehiro said, along with growing concern about global warming.
Electricity demand may rise 1.6 percent in fiscal 2008 compared with the projected 3.0 percent gain for this year. Faced with surging fuel costs, many factories have switched off their in-house power generators and bought more electricity from regional utilities such as Tokyo Electric Power Co., the report said.
Tokyo Electric, Asia’s largest power generator, and other Japanese utilities promote the construction of housing that uses electricity for cooking and heating, rather than natural gas, kerosene, or liquefied petroleum gas.
----------------------------- Crude maintains momentum
The benchmark crude oil price in New York as of 5:43 p.m. Tokyo time was $90.59 a barrel. The IEEJ predicts oil prices in New York will average $80 in the next business year. It expects the price will be kept high as hedge and investment funds pour money into the commodity futures market.
Average retail gasoline prices in Japan rose to 155.5 yen a liter on Dec. 10, according to data compiled by the Oil Information Center, a trade ministry research body. That is the highest since the information center started its survey in 1987. The retail price of kerosene climbed to 1,757 yen per 18-liter container on Dec. 17, marking an all-time high.