Saturday, January 9, 2010

China And India Displacing OECD Oil Consumption


From Future Pundit:

Writing in a comment on a post at The Oil Drum Gregor Macdonald very succinctly sums up an energy future where China, India, and other rapidly developing countries gradually displace OECD countries as oil purchasers.

High oil prices are more painful to the OECD/Developed world user than the Developing world user. In the Developing world coal accounts for the largest chunk of BTU consumption, and the marginal utility to the new user of oil is high. In other words, the OECD user is embedded in a system where the historical consumption pattern has been to use much more oil per capita. But in the developing world, just a small amount of oil to the new user of oil is transformational. It will be the developing world therefore that will take oil to much, much higher prices in the next decade. They will use small amounts per capita, but the aggregate demand will be scary high. After all, the developing world's systems are not leveraged to oil. They are new users of oil--and unlike us, aren't married to a system that breaks from high oil prices.

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