High Oil Prices are Starting to Affect China and India

Update: Not long after I wrote this post, the EIA revised the oil consumption amounts by country that they had published a few days earlier. The numbers changed substantially for quite a few of the countries outside the US and Europe. While the trend is still to lower growth in oil usage in 2011 and 2012 in China and India than in 2010, the trend is less pronounced.

Furthermore, we now have another set of numbers to check against EIA’s oil consumption amounts. BP released Statistical Review of World Energy 2013 yesterday, June 12. A comparison of annual increases in oil consumption (on a barrels of oil per day basis, not adjusted for population growth) from the three sources is as follows:

Comparison of growth in oil consumption, based on EIA original 2012 numbers, EIA revised 2012 numbers, and BP new Statistical Review of World Energy data. (All amounts based on "barrels per day" consumption.)

Comparison of growth in oil consumption, based on EIA original 2012 numbers, EIA revised 2012 numbers, and BP new Statistical Review of World Energy data. (All amounts based on “barrels per day” consumption.)

There seems to be fairly consistent reporting of oil consumption for major OECD countries, but this is  less the case for non-OECD countries. The lack of stability in reported oil consumption, both between reporting organizations and between reports, suggests that oil consumption numbers have “large error bands” around them. Below is a revised version of my original post.

Revised post. Based on revised EIA data, it appears that at current high oil prices, oil  demand the United States and Europe is being reduced. There are some indications that oil demand in China and India are flattening, but these are preliminary. For those who are wondering how high oil prices need to be, to be “too high,” the answer is, “We are already there, for the United States and Europe. We are getting there for China and India. In fact, continued high oil prices are a big reason behind the recessionary forces we are now seeing around the world.”

China and India, like the United States and most of Europe, are oil importers. Over time, we should expect high oil prices to have an impact on all importers. While the original EIA data suggested that China and India were affected in  2011 and 2012, the impact is much more muted using revised data.

In this post, I also explain why a person might expect a difference in the impact of high oil prices on oil importing countries compared to oil exporting countries.
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