May 23 (Bloomberg) -- U.S. motorists, who are paying record prices for gasoline, drove 4.3 percent less in March for the biggest monthly drop ever, a government estimate showed. The decline in vehicle miles traveled was the first for March since 1979, when Iran cut oil exports, the Federal Highway Administration said today in a statement. Gasoline at U.S. pumps rose to as high as $3.29 a gallon during the month, according to motoring group AAA. The price rose to $3.88 yesterday. http://bloomberg.com/apps/news?pid=20601072&sid=aO9IKutlgmVA&refer=energy Oil started the year at $95. Hard to believe that oil can sustain prices 35% higher when demand has come in below estimates. Unless of course the rest of the world is blowing away their estimates for consumption.
India and China consume about 2 bbl of oil per capita, but have about 10x the US population. As they continue to become "motorized" and "refrigerated", easy to see how their demand for energy will be very strong for decades... regardless of price.
I don't think a large percentage of that 2 billion will have private, oil-fueled, transport though. A lot of Chinese use motor scooters that you take the battery out of to charge overnight, and that electricity comes from coal power more than oil. And China has a lot of uranium for when the coal stocks run low. The buses are numerous though and are oil-fueled just as the even more numerous taxis are so their energy needs are certainly going to increase.
Look at the percentage of income spent on food in India and China per capita. The real population driven energy demand drivers can not simply afford *unsubsidized* product in the long run with current CPI/consumption balances taken into consideration. The whole Chinese and Indian labor/export model (which is the foundation of their rampant growth) does not work if the governments stop picking up the tab. For examples, look at Indonesia. They just raised the price of gasoline (it is subsidized) to the equivalent of $2.45/gal. At a long run breakeven for refiners of $7-8 on the crack spreads (of $3.33 avg product price at $133 crude +$7 crack), that is still 27% below market clearing price. And even with that, there are bloody riots. Take a look at these China statistics: http://www.ers.usda.gov/Data/China/...Rural+consumption+&+expenditures&ReportType=0 The Urban consumer in China in 2006 has about $1469 of income annually. How much unsubsidized oil (at $3.33) can he afford with food already consuming probably in excess of 26% of his expenses (imagine these #s with the price increases in commodities/inflation) ? The Chinese rural peasant (most of the population) has $448 of income. He spends 34% of his income on food in 06 (probably a lot more right now). How much $3.33/gallon product can he afford to be economically competitive in the rest of the world [only justified by his willingness to work for rock bottom labor rates]? http://www.ers.usda.gov/Data/China/...Rural+consumption+&+expenditures&ReportType=0 You China+India demand pipe dreamers need to get over it. This is an Olympics diesel stockpiling blowoff top and will not be sustainable in the long run. As long as Arab oil princes are running AC to 50 degrees F in their 5 million square foot palaces 365 days a year off oil fired power plants, they are quickly sowing the seeds of demand destruction and eventual replacement of energy sources (nuclear, wind, solar, etc).
http://www.energybulletin.net/26194.html ".......Yes, the US military is completely addicted to oil. Unsurprisingly, its oil consumption for aircraft, ships, ground vehicles and facilities makes the Pentagon the single largest oil consumer in the world. By the way, according to the 2006 CIA World Factbook rankings there are only 35 countries (out of 210) in the world that consume more oil per day than the Pentagon. " Do you think the u.s. military is cutting back?
Could be that one day when oil seems scarce, the US military will confiscate all of America's oil supplies... in the name of "national security".
Thats true but thats a thesis which will take decades to fully play out. Doesn't explain why oil prices have doubled in the past year.