Oil demand shift: Asia takes over

[one...two...tree 2,762]

America, Europe: Get in the back seat. Someone else wants to drive.

The realization that oil prices aren't about them anymore has been slow to dawn on Americans after a century of being the world's swing consumers. But the fact is that the world's developing economies have been outbidding the developed OECD countries for oil since 2005. Some time this year, non-OECD oil demand will overtake OECD demand, and they will stay in the driver's seat for the remainder of oil's reign as the lifeblood of the global economy.

The reason is simple: In Asia, they put eight guys on a small motorcycle that gets 60 to 80 mpg in fuel economy, or one guy and a load of boxes on a moped getting 225 mpg, while in the U.S. we drive around solo in SUVs that get under 18 mpg. So if you should wonder why oil prices remain stubbornly high while U.S. demand continues to fall precipitously, just keep the above photo in mind.

Conventional oil supply hit its peak-plateau around 74 million barrels per day (mbpd) at the end of 2004, but demand kept right on growing, pushing prices up. To increase liquid fuel supply to meet the 90 mbpd the world will demand this year, we had to turn to unconventional fuels like tar sands, tight oil, and biofuels, all of which have far higher production costs. As the old oil, with production costs under $20 a barrel in places like Saudi Arabia, depletes and is replaced by new oil with production costs over $80, the world price must rise higher still to accommodate the higher cost of production.

The consumer with the least efficiency loses in this contest. And that's us.

New cars, minivans and SUVs in China already get nearly 36 mpg and will be required to get 42 mpg by 2015, according to research cited by the New York Times. In America, we merely aspire to match China's current fuel economy by 2016.

The numbers are remorseless. The average efficiency of our existing fleet of 240 million cars and light trucks is in the neighborhood of 22.5 mpg. China will add 125 million cars to its fleet over the next five years, said Ambrose Evans-Pritchard in The Telegraph this past weekend. That's half the size of the total U.S. fleet. And those cars will get nearly twice the fuel economy that our fleet does.

http://www.smartplan...-takes-over/400

[The_Dude 1,142]

Sorry Steven, we can't go to war with the ChiComs until we eliminate the Iranian threat.

[Danno 1,228]

The photo reminded me of this freak accident.