The prices of commodities reach a high of two years
The US Energy Information Administration recently released its report showing oil consumption by country updated until 2012. Based on this report, it seems that the increase in current oil prices, demand in China and India is reduced So for those wondering how the price of oil should be up, be too high, the answer is, we are already there, in fact, the persistence of high oil prices are a big reason behind the recessionary forces we now see around the world.
Many of the problems of China and India is that, as the United States and most of Europe, are oil importers In this post, I also explains why there is a big difference in the impact of high oil prices on oil-importing countries in relation to oil exporters.
Figure 1 Liquids, including biofuels, consumption etc. to China, from the data of the EIA of the US, and the Brent oil price in 2012 dollars, the BP Statistical Review of World base Energy updated with the EIA data.
Figure 2 liquids including biofuels, etc. consumption for India, based on data from EIA US and Brent oil price in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
We can see Figures 1 and 2 100 per barrel prices, there is a flattening defined as per capita consumption in India and China, per capita consumption is used in this analysis, because if consumption Total oil is rising, but less the population increases, the average consumption decreases.
There are many other importing countries even sharper declines in consumption as China and India These decreases open to the 2005 to 2007 period, while oil prices have increased, and continued while prices oil remained high An example is Greece.
Figure 3 fluids, including biofuels, etc. Consumption of Greece, from the data of the EIA US and Brent oil price in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
In fact, all the PIIGS Portugal, Ireland, Italy, Greece and Spain, known for their recession problems have shown sharp declines in oil consumption.
4 per capita consumption of petroleum liquids for called PIIGS countries, based on EIA data.
Europe total shows a drop slightly weaker oil consumption than the PIIGS.
Figure 5 liquid oil including biofuels, consumption, etc. for Europe, based on data from EIA US and Brent oil price in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
The United States shows a similar decline in consumption in Europe.
6 oil liquids including biofuels, consumption, etc. for the United States, using data from the EIA US and Brent oil price in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
Oil consumption is increasing faster than the population in many oil-exporting countries if we look OPEC in total, we see a big jump up in oil consumption per capita in 2011 and 2012.
7 oil liquids including biofuels, consumption etc. to OPEC, from the data of the EIA of the US, and the Brent oil price in 2012 dollars, the BP Statistical Review of World base Energy updated with the EIA data.
In fact, this pattern occurs in both Saudi Arabia and OPEC outside Saudi Arabia.
8 oil liquids including biofuels, etc. Consumption for Saudi Arabia, based on data from EIA US and Brent oil price in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
For Saudi Arabia, in 2012 the per capita oil consumption is more than five times that of Europe outside Saudi Arabia, there is a bump upwards defined in consumption, both during the period preceding price of 2008 and corresponding to higher prices in 2011 and 2012.
Figure 9 oil liquids including biofuels, etc. consumption for OPEC ex Saudi Arabia, from the data of the EIA of the US, and the price of Brent oil in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data .
One reason why oil exporters show a strong growth in oil consumption than other countries is because oil is becoming more difficult to extract, and because the easier to extract the oil was extracted first There are often indirect requirements for oil and as desalination have enough water for a growing population, or a new oil refinery to refine difficult I talk about these issues in my post, our Sinkhole investment problem.
A second reason why oil exporters often show a strong growth in oil consumption because exporters often provide price subsidies on petroleum products, so that their citizens should not pay the full cost of the product so their citizens do not really know the high oil prices that most importers do.
A third reason why oil exporters show stronger growth when are high oil prices has to do with all the money these exporters receive when they sell high oil prices this week The Economist has an article Saudi Arabia Risk Alert the next housing bubble He talks about the large number of office buildings, schools, homes at low prices, and other ongoing construction projects, through easy credit availability combination and lots of money petroleum article indicates that citizens rarely put their new wealth in investments in paper instead, a significant portion of their wealth is reflected in the construction projects that require the use of oil.
Norway is an exporter who does not subsidize the price makes oil has quite a high tax on oil use in private vehicles It shows most of the oil consumption per capita in the last two years, despite the global price of oil higher.
Figure 10 liquid oil including biofuels, consumption etc. for Norway, based on data from EIA US and Brent oil prices in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
Brazil is not an oil exporter, but he tried to ramp up its production Its consumption per capita has increased recently too.
11 oil liquids including biofuels, etc. consumption in Brazil, based on data from EIA US and Brent oil price in 2012 dollars, based on BP Statistical Review of World Energy updated with the EIA data.
In fact, Africa Total, Central and South America in total and the Middle East in total in 2011 and 2012 as the population, show more rapid increase in oil consumption These are areas which, in total are oil exporters.
Some countries use the very low oil, such as Bangladesh, show the rise in oil consumption per capita in 2011 and 2012, even with oil prices This could indicate that some production shifts to areas costs more low as China and India.
Australia shows increasingly by oil consumption per capita, perhaps because of the use of oil in resource extraction and transportation.
Why a drop in oil consumption per capita oil importers matter.
A drop in per capita oil consumption is a likely sign that oil is increasingly unaffordable We know that oil is used to make and transport goods if less oil is used, or if the use of oil rises less rapidly than in the past, there is real chance that the economy slows.
Figure 12 Global growth in energy consumption, the use of oil and GDP on average over three years of oil and energy consumption based on BP 2012 Statistical Review of growth in global energy GDP from the economic research USDA data.
There are a number of reasons oil consumption may be down fewer goods sold can be transported, perhaps because European demand is falling Citizens may be driving less in their free time or a lot of young people can be unemployed and unable to afford to buy a car or scooter to any engine of these changes could mean a slowing economy.
Obviously, there are situations where reduced consumption of oil doesn t mean a slowing economy A shift from manufacturing to a service economy could lead to lower oil consumption; a shift to cars and more fuel-efficient trucks could lead to lower oil consumption, but these changes tend to happen slowly over time, not all at once, as oil prices rise.
Another way oil consumption can be reduced is if a country has in the past generated electricity from oil, and this generation is moved to another fuel, such as natural gas This type of change is made in Greece but it seems unlikely in China and India as well, if the houses are heated with oil, sometimes an alternative fuel can be used, reducing oil consumption in China and India aren t areas where the oil been traditionally used to heat homes, however.
In general, however, a sharp reduction in oil consumption in a growing economy like China and India, are a cause for concern, if one price growth amounted expect oil linked to 'economy.
The US oil consumption model resembles that of an oil-importing country, under pressure from high oil prices Recently, there has been much publicity about American oil production more, but that does not really change the situation if we look at uS consumption of oil and liquids production is the production and consumption for all sorts of things, including biofuels are included, the United States shows that remain an oil importer actually, it is still far from becoming an oil exporting country, and especially aren t oil prices by many, and high oil prices are our real problem.
Figure 13 American oil liquids, including liquid natural gas, refinery expansion and biofuel production and consumption, according to EIA data.
The situation of European oil imports is worse than the situation of liquids United States, and no doubt part of its current economic problems graphic of his recent production and consumption is as follows.
Figure 14 European oil liquids, including liquid natural gas, refinery expansion and biofuel production and consumption, according to EIA data.
Difference between importers and additional thoughts oil exporters.
The cost of extraction varies considerably by country and area in the country to provide a large enough amount of oil in total world oil prices must be high enough to provide sufficient income for the largest producer of costs clearly, if all the oil company pay the price for the largest producer of cost, many would receive much more than necessary for future extraction of oil and the payment of dividends where does all that extra money go.
To a large extent, this money is gripped by governments in the case of oil-exporting countries, governments often own oil companies directly, but even if they do t, the governments of extraction tax oil at very high rates to ensure that the government gets the benefit of any extra income Sometimes the production sharing agreements are used A painting by Barry Rodgers consulting oil and Gas Figure 15 below shows that for many oil-exporting countries, taking Government is 70 to 90 in operating income which, net of direct costs of extraction.
Figure 15 Graph showing the government take a percentage of operating income by Barry Rodgers Oil and Gas Board.
Even in the case of the United States, decision of the government is important Barry Rodgers, in an article in the May issue Petroleum Gas Journal estimated that for oil could be tight, as the oil in the Bakken, the average government decision is 33 29 per barrel that compares with 19 to 50 per barrel for tight oil from Canada These amounts include payments to state governments and the federal government if extraction costs are low as in the case of Alaska, the state adjusts accordingly its tax.
Oil-importing countries would like the world to have a level playing field in relation to oil prices in the real world, it doesn t happen Petroleum Exporting Countries get huge benefits in the form of the tax they collect oil that they often sell abroad, the amount of tax revenue to 70 or more from the fiscal budget of a country from all sources If oil exporters have small populations, they can afford provide oil at subsidized prices to their own people if they have large populations relative to exports, providing a subsidized price soon eliminate all exports.
Economists have us believe that most of the differences between oil exporters and oil importers will even because money spent by the oil exporting countries to purchase goods and services and purchases of bonds State oil importers should especially make their way back to the oil importers There are several differences, however.
An oil exporters may choose to charge their citizens a low oil prices, thus isolating the world of high oil prices, and increase demand for oil is, the amount of oil they can afford the increase demand allows these countries to increase their oil consumption, as well as other countries, subject to price increases, reduce their evidence presented in this article suggests that this actually happens high prices.
B Petroleum Exporting Countries should not tax the income of individuals and companies, or tax value added institute because their fiscal needs are mainly covered by levied on oil taxes that is exported This gives them a competitive advantage in the manufacture of products from petroleum or natural gas to international trade.
C. As the global oil supply is limited, the oil that the oil exporters are able to buy at subsidized prices, though to construct buildings of unnecessary offices in Saudi Arabia withdrew from the world market, climb the price of oil, and leaving less than other countries to consume.
D The money that is spent by the oil exporters rarely return to the wages of people in the oil importing countries that are faced with the purchase of petroleum products at higher price Actually, I have shown that in times oil prices, wages United States tend to stagnate.
Figure 16 high oil prices are associated with lower wages price of oil in 2011 from 2012 Statistical Review of World Energy BP updated 2012 data from the EIA and urban CPI BLS average salary calculated dividing the private sector wages from BEA Table 2 1 through the population of the United States, and upgrade costs in 2012 using the urban CPI.
At best, the money returns to financial institutions and companies that sell products such as cereals exported The increase in grain demand tends to increase food prices, with a focus on the economy.
The Chinese oil demand and India Falling - proof Prices are too high, demand, China, India, the fall.