341. INDIA'S OIL DEMAND IS NOT INCREASING MUCH
Recently I've noticed a lot of articles blaming the spike in oil prices on demand from China and India.
Goldman Sachs:
But he [Giovanni Serio, oil analyst at Goldman Sachs] remained positive on oil long-term because of the market's deeply-ingrained structural constraints that mean supply cannot easily rise to meet rapidly increasing demand from emerging countries like China and India.LinkDick Cheney:
Cheney said there had also been a "dramatic increase" in demand from countries like China and India,LinkChristophe de Margerie, head of France's Total SA:
The crunch is due to a slate of “above-ground” factors that make it unlikely the world will ever produce the amounts of oil Mr. Yergin or the International Energy Agency think it will, Mr. de Margerie said. That includes sudden and voracious demand from China and India;LinkSounds plausible enough. After all, "surging demand form China and India" is the soundbite reason given to justify the bubble in all commodities. There's just one problem. Oil demand from India is not rapidly increasing, and it's not dramatically increasing, and it's not sudden and voracious either.
Here's India's recent oil consumption from the June 2007 BP Statistical Review:
2004: 2573kbd
2005: 2569
2006: 2575
Here's the oil consumption figures for "Other Asia", which includes India, from the EIA:
2005: 8.53mbd
1st quarter 2006: 8.62
2nd quarter 2006: 8.71
3rd quarter 2006: 8.54
4th quarter 2006: 8.82
1st quarter 2007: 8.73
2nd quarter 2007: 8.82
3rd quarter 2007: 8.63
by JD
posted by JD @ 9:41 PM
21 comments
21 Comments:
Here we're talking about crude oil right? I assume there aren't that many rafineries in those countries requiring oil, but with increasing car production in both india and china, I can imagine their demand for gasoline is on the way up... Perhaps this could be the cause? It would be interesting to see comparison of "oil products" usage, rather than crude oil consumption...
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Thank you! JD
That's surprising about India. Their economy is growing very rapidly, and apparently without increasing its oil consumption. That's good news.
JD, this is off-topic, but have you thought about posting an entry about compressed-air propulsion systems? I think this is very cool and very promising.
http://freeenergynews.com/Directory/CompressedAir/index.html
http://green.yahoo.com/blog/ecogeek/312/air-powered-cars-in-america-by-2010.html
Good post JD. The title should actually be "India's Oil Demand Is Not Increasing Much." Because it did go up by about a measly .10 mbd from 2006 to 2007. I figured I'd make note of this before some doomer does with a snotty post.
On a side note, I hope the introduction of the Tata doesn't put the snail-paced demand increase trend into overdrive.
May as well note that Chinese consumption of crude oil was down for 2005, or as the IHT put it mid-year:
The International Energy Agency on Wednesday lowered its estimate of global oil demand this year, citing a sudden and mysterious drop in Chinese consumption. After growing 11 percent in 2003 and 15.4 percent last year, China's oil use dropped by 1 percent in the second quarter of this year from a year earlier, the agency said. The drop is the latest in a series of unclear and often conflicting indications about whether the Chinese economy is still growing strongly.
Doomers, though, either denied this or more generally assumed it to be proof of peak. Their level of analysis always astounds me as do the intensdity of their beliefs; truly a religion.
I figured I'd make note of this before some doomer does with a snotty post.
Good point Uf. I fixed the title to be more accurate.
Hi guys, I just found this blog.
This is good news to hear, and not only that but in case none of you know the plateau has been done away rose from 86 mbd to 87 mbd. Good news and not only that but most of the Peak Oil proponents had to push the Peak Oil date even further to between 2010 and 2019. At any rate this is all good news. Maybe China and India are looking at consevation as well and mitigating their ecnomys too.
Looks like demand destruction to me, just what you'd expect with the high prices. I suspect you'll find the same in many poorer countries.
One friend of mine who volunteers in Central America helped electrify a village there in 2002, using a diesel generator. This allowed the locals some amenities like TV and internet. Things were all good until last year. They could not buy the fuel anymore. The village is dark again.
What should amaze us is not that consumption in those countries is flat, it's that it's not dropping faster.
I took a look at EIA statistics which gives numbers up to 2006 (and estimates of 2007 in some cases).
http://tonto.eia.doe.gov/country/
Comparing the consumption in 2006 to what it was in 2000 gives the following rise in consumption :
China 51,7%
India 21,6%
Russia 13,2%
United States 5%
Here's the top 6 oil consuming countries :
1. United States 20,687
2. China 7,273
3. Japan 5,159
4. Russia 2,920
5. Germany 2,665
6. India 2,587
Now even though the growth in barrels on the behalf of India is about half of the US, it's pretty damn large. But China's growth is just huge (three times as much as the US in barrels). It's quite a fact that economic growth in per cent has been the strongest in these two countries and they both account for a large share of global oil consumption. So i'd argue that the title of this article is completely bollocks. Apparently India's impact is quite a lot smaller than China's, but it's large nevertheless.
And how convenient of you not to supply a link to the BP statistics aswell. For all i know they might have been estimates from 1990, as it looks like the data differs quite significantly from this EIA data.
Oh yeah, and i'd like the EIA data link as well. That also seems to be completely wrong. Of course also by comparing "Other Asia" you bring the numbers closer to the mean average - something which is just a little suspicious :P
BP Statistical Review 2007
EIA Data (See "Selected Countries, Total OECD, Total Non-OECD, and World Total, Most Recent Quarters and Years (Million Barrels per Day)")
It's quite a fact that economic growth in per cent has been the strongest in these two countries and they both account for a large share of global oil consumption.
That's nice, but irrelevant. The question is whether India's oil demand growth is rapidly increasing, dramatically increasing, sudden and voracious etc., as claimed by the quotes I indicated. It's not. Look at the BP numbers:
2004: 2573kbd
2005: 2569
2006: 2575
The main culprits in recent increased oil demand are China and the U.S., as you yourself point out. Not China and India.
I'm not sure where you got those numbers for BP statistical review because when i downloaded the pdf for 2007 it sure gave me different numbers than you reported.
2004 : 2420 kbd
2005 : 2573 kbd
2006 : 2569 kbd
"That's nice, but irrelevant. The question is whether India's oil demand growth is rapidly increasing, dramatically increasing, sudden and voracious etc., as claimed by the quotes I indicated. It's not. Look at the BP numbers:"
Well that's not true. I'm not quite sure the statistics are too accurate either - but according to BP India grew 6% from 2004 -> 2005 and according to EIA they grew the 6% from 2005 -> 2006.
The 2007 EIA did not excplicitly mention India, only "Other Asia", and there's no explanation of what other asia actually means. But it's clearly noted that it's recently revised data.
Nevertheless, when you look at numbers from a longer time back as I did, you can clearly see that India has been surpassed in consumption (in per cent) only by China. It seems to me that the error margins in consumption are considerably large when comparing EIA and BP data so you should probably only make conclusions based on longer time periods.
If you do try to make conclusions though, I think you may want to look at information about economic growth instead. I consider it highly improbable for India to have huge economic growth without a huge increase in petroleum consumtion. Sure it may be less than last year, but if economic growth was 8-9% in 2005-2006 and the same in 2006-2007 I believe the oil consumption patterns can't be totally differing from these numbers (as you try to argue).
"The main culprits in recent increased oil demand are China and the U.S., as you yourself point out. Not China and India."
I don't think it's really about which country grows most in the terms of barrels. The question is if the growth is unexpected. Surely it was not unexpected that US oil consumption would grow 5% from 2000-2006? But it probably was unexpected that China's consumption would grow 50% and India's 20% (if this is true).
Anyway, I have to say i expected to see India stand out more clearly but I still think recent economic growth and longer historical patterns in India's oil consumption are a more valid data source than your critique. And if India's economic growth continues its consumption will probably have an even greater impact.
I'm not sure where you got those numbers for BP statistical review
I got them from the June 2007 statistical review, available on the page I linked to. You can download the excel file directly from here.
You're getting your figures from the individual file on oil consumption, and there appears to be some discrepancy. Nevertheless, both sets of figures show no or tiny growth from 2005 to 2006, so India really shouldn't be highlighted as a nation driving up oil prices in today's market.
"Nevertheless, both sets of figures show no or tiny growth from 2005 to 2006, so India really shouldn't be highlighted as a nation driving up oil prices in today's market."
Yes, on BP's data. But i just made an argument that you should carefully examine your reliance on that. Please don't make illusions of counter-arguments when they aren't such.
Here's something to read
http://commerce.gov.in/pressrelease/pressrelease_detail.asp?id=2209
Perhaps import data would be more accurate in telling us the actual impact of india on the oil price. For some reason BP does not have anything else than 2006 imports by area in their report. EIA has this data up to 2006.
We do know that the global rate of yearly grains consumption is rising quite a bit faster than it has in previous years.
I've read some estimates pegging it as having shifted from the annual growth rate of 1.2% of yesteryears, to as high as 2% per year.
Frankly, the only people I see dismissing the crises in biophysical infrastructure are economists, and economics is simply not a science.
Babun--JD's numbers are right. You are the one mis-stating the data from BP. JD correctly referenced BPs data for years 2004-2006. Your numbers are India for 2003-2005. So JD's conclusion is correct...India's crude consumption growth was NEGLIGIBLE over that three year period. You are either sloppy or deceitful. Care to clarify?
"Babun--JD's numbers are right. You are the one mis-stating the data from BP. JD correctly referenced BPs data for years 2004-2006. Your numbers are India for 2003-2005."
You are right about this. I misread the pdf.
"So JD's conclusion is correct"
That however does not mean that JD's conclusion is correct. My other arguments hold and I'm not being sloppy or deceitful. I'm taking a critical viewpoint of JD's argument because it seems that the data might have rather large error margins. I guess you just take everything on this blog as a fact even if they challenge information widely believed to be facts?
Did you take a look at the EIA or India's department of commerce links i posted?
I remember the following from a sympoium on energy efficiency (sorry, I don't have the reference at hand):
Unlike China, where energy consumption shot up since 2000 india's energy consumption is still much lower - as is india's economy and industrialisation.
However recently there has been a strong boost in electricity consumption in india. One reason may be the increasing use of air conditioning (same as in many southern countries).
The actual comparison might be clearer if you compare current daily consumption figures with those from the mid-1990s, a time when overproduction created a world-wide glut of oil. That was instrumental in suppressing prices in that decade. If you compare consumption figures for China and India from 1995 and today (and remember to multiply them by 365), you'll see that the growth in those two economies was enough to introduce a measure of the law of scarcity in the oil markets. This is not helped by the U.S.'s refusal to drill for its own oil, although substantial reserves exist under the outer continental shelf, North Dakota, Montana, Colorado, and yes, under the one-tenth of one percent of ANWR.
It didn't take a huge amount of consumption increase from China and India to create the current crisis, just enough to soak up the excess production.
At the end of 2001 oil was trading at $18 a barrel, now it's at $140 a barrel. That is a 630% price increase in less than 7 years, and in less than a year and a half alone, the price of oil has gone up %150. Since 2001 global demand/production has only increased by 15% (73 mbpd to 85 mbpd).
OK...now go head and give me a breakdown and explain how the 630% increase in the price of oil is justified.
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