Global economic expansion has resulted in a world demand for oil that has been rising steadily – and has proved remarkably resilient in the face of high prices.
According to Cambridge Energy Research Associates, world oil demand will increase a further 1.3 million barrels per day in 2008, with Asia and the Middle East accounting for 800,000 barrels per day of that growth.
To put that figure in context, the US consumes about 20.6 million barrels per day, or roughly 25 percent [one quarter] of global demand. China is the second-largest consumer, at 7.2 million barrels per day. Japan, with 5.2 million barrels per day, is third.
High gas prices have dampened demand somewhat, but not as much as might be expected, according to Jeroen van der Veer, chief executive officer of Royal Dutch Shell.
The demand reaction to continued high prices might be a delayed one, said Mr. van der Veer at a recent symposium at the Council on Foreign Relations.
"We think it may happen that people won't drive less, but that next time they buy a car they will buy a more fuel-efficient car," he said.
NVDL: What no one talks about is population growth, and how this pushes up the tide of demand. Even if demand contracts, the latest slew of university graduates in the US and other wealthy countries demand what they feel entitled to have (based on their parents consumption patterns). While consumption might decrease, demand in the basic sense of equipping additional users to operate (cars, suburban homes and gadgets like phones, Tvs and computers) basically provides for a fundamental level of demand that isn't easily eroded. Thus we face a future where there are holes in the supply chain, a future where thereare shortages, have nots, economics losers. We are seeing the poor taking a big hit now. The Middle Classes around the world are next.
2 comments:
Another factor that doesn't bode well for oil prices in the future is the growing ownership of cars in China and India. While a few Americans may downsize from an SUV to a sedan, millions of first-time car owners in Asia will more than take up the slack in demand for gasoline.
Dave Donelson, author of Heart of Diamonds
Exactly. And for first time car owners, it's something like it was for American's owning their first TV set in the 70's. And does anyone remember those years in terms of cars - Thunderbirds, big oversized gas guzzlers. That's happening in China now. Image and ego is tied very much to the ownership of an automobile, and size, power and flash is far more important than piddlywinks like fuel efficiency. What America saves, China consumes.
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