The market for oil is undergoing a fundamental change. Previously, the OECD was the primary consumer; today, demand is shifting towards emerging market economies.On a daily basis, OECD countries demand about a million barrels less today compared to a year ago. However, non-OECD countries more than made up the shortfall, demanding an additional 1.5 million barrels. The net effect was to increase overall demand by 0.5 million barrels a day.
Where is all this additional demand coming from? No surprises here; China, Asia, Latin America and the middle east. Even Africa managed to show up as a major source of additional demand.
3 comments:
Given that the US consumes 25% of the world's oil(approx 22m barrels/day)how much could be saved if their usage dropped to the same level as,say Western Europe?
This process has probably already started and explains why refining capacity in the States was not expanded over recent years as the oil companies would have realised that any new plant would soon be redundant due to the unsustainability of US oil consumption habits.
Alice,
This has to be analysed in relation to emerging market subsidies. About half of the world's population is currently shielded from the oil spike due to subsidies. It was only 5c a litre in Venezuela recently.
Basically the emerging governments have been buying off their populations to counter their money printing. They can no longer afford to and have started rolling back the subsidies.
When they are suddenly subject to real prices we'll see demand destruction and that age-old saying "the cure for high prices is high prices".
Nick
"Inflation is a forward-looking phenomenon"
Not true; it is a lagging indicator resulting from past credit growth.
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