Gas comsumption to jump by a quarter in China by 2010
One of the factors keeping the world price of oil at historically high levels is continually increasing demand and relatively static supply. One of the biggest drivers of that growth is the ever-increasing population of cars in China, which, along with India, has been the fastest growing markets. That growth in the number of cars means a commensurate increase in the fuel needed to power them. By 2010, gasoline consumption is anticipated to increase by almost twenty-five percent relative to 2006. Given the twenty-seven percent increase in car sales last year that is probably a very conservative estimate. This increase in gas consumption will also continue to make Chinese pollution worse in the coming years. It's not realistic to expect growth in China to be scaled back in order to help satisfy the rest of the world's appetite for oil, so that means something needs to change dramatically.
[Source: Resource Investor]
Reader Comments (Page 1 of 1)
rgseidl 8:41AM (3/29/2007)
So far, oil supply growth is still keeping up with demand growth, otherwise we'd be in a serious supply crunch right now. Seems to me the main reason prices are high is because of fears of the Iraq conflict spreading beyond its border and, of armed conflict with Iran. Throw in instability in Nigeria, Hugo Chavez, Vladimir Putin, declining production in the North Sea plus a few other issues and, it all adds up to a substantial medium term supply risk premium.
China's leadership does recognize that environmental issues were one of the reasons the Soviet Union collapsed. In this context, the gap between what the Politburo decides and what provincial party bosses actually implement should raise a few eyebrows.
Still, the Chinese are not shy about taking drastic measures: a few years ago, they suddenly reined in the available credit volume for new car purchases. This caught manufacturers quite unawares. More recently, they simply banned motorcycles from cities in souther China because many had been implicated in robberies. Also, dozens of Chinese cities are scrambling to set up public transport systems.
China was the leading industrial nation of the world for 28 out of the past 30 centuries. They'll figure out how to deal with the negative side effects of their current growth without resorting to direct armed conflict with the US over natural resources. That said, it would help if US consumers gradually reduced their consumption of oil & gas.
Reply