Thursday, Jun 26, 2008
A rigged market in oil?
Casey Research: Where have all my commodities gone?
Assuming that the 7.3 million new car owners in 2008 each drive 5,000 miles a year, and they achieve 40 miles per gallon, the result would be an additional 45.6 million barrels of crude demand, equivalent to 125,000 bbl/day. In other words, new Chinese drivers will devour 25-30% of the recently promised Saudi production increase in a single year.
To those predicting an imminent decline in world oil demand, we say: don't bet on it.
Posted by cornishman @ 02:14 PM (362 views) Add Comment
5 Comments
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1. Fingerbob69 said...
Which leaves 70-75% not used by China. so to paraphrase the original question...where's that going?
2. plato said...
Yes but as we the West are forced to start walking everywhere, this should balance the demand to some degree. LOL
3. Delboypass said...
How is the figure of NEW drivers made up as this is pretty key to your arguement??
include deaths, 2nd cars, multiple people on licence, commercial???
4. landofconfusion said...
I know that Chinese wages are rising but by that much? If the 'rich' west can't afford it how can they?
5. drewster said...
Fingerbob69,
The estimate only includes China and it makes some bold assumptions. There are 7.3m new car owners each driving 5000 a year; but the 6m or so who bought cars last year are probably increasing their driving to 7000 miles a year (in general as people own a car for longer they drive it more). It's not just cars: there are more motorbikes, more lorries, and more airline flights in China every year. Now imagine that situation repeated in Brazil, Russia, India, Thailand, etc. Also Saudi Arabia itself uses more oil itself every year - the citizens of Saudi Arabia are flush with oil revenue and are buying fancy new cars with little regard to fuel efficiency.
landofconfusion: Yes, China is growing incredibly rapidly! Their currency is getting stronger each year whereas the dollar is depreciating. They are getting richer all the time.