It's not just China and India
It's oil-producing countries themselves driving up demand for oil. And we don't just mean the ridiculous subsidies that make the retail price of gasoline in Venezuela and Iran considerably less than $1 a gallon.
I was familiar with this phenomenon already, but a good piece by Kevin Hall of the McClatchy Newspapers (Miami Herald, Sacramento Bee, etc.) pulls together some figures that are new to me…
Together, the six nations that make up the Gulf Cooperation Council
(GCC) are now consuming about as much oil as China, whose thirst for
oil frequently gets the blame for tight global supplies.
GCC countries — Saudi Arabia, Kuwait, Oman, Qatar, Bahrain and the
United Arab Emirates — have grown at a 7 percent annual clip since
2002. They boast a per-citizen income — $19,000 — that is three times
China's. Demand for oil in the Middle East has risen by almost 6
percent annually since 2004.
Can you just imagine what the per-capita consumption rate is in the GCC? Anyway, this is something to keep in mind as we keep an eye on those countries from both a financial and strategic perspective.
Also cited in the article is a report from Lehman Brothers anticipating rising Middle East oil demand this summer, meaning tight supplies even if a recession brings down U.S. demand.
Hall seeks out an impressive range of opinion for his story — everyone from Matt Simmons…
"It starts to create unbelievably really serious demand. And then every
time you jump 1 million barrels per day of energy demand in the Middle
East, your supply (for export) falls by 1 million barrels per day,"
said Matthew Simmons, an investment banker specializing in oil.
…to Daniel Yergin, who's beginning to concede that the balance of supply and demand are shifting, even if he remains confident that technology will save the day.
"I've never seen so much investment going into all parts of the energy
spectrum — from renewables and alternatives to conventional energy,"
said Daniel Yergin, an oil historian. "And I think we need a sustained
high level of energy research and development to really build
resilience. For the foreseeable future we're going to be a significant
importer of energy."
The Lehman report figures we could fall back to $85 oil after this summer. Then again, T. Boone Pickens was figuring oil would climb back down early this year. No more.