MasterCard reported on Tuesday that American drivers decreased their consumption of gasoline in the days leading up to and including the Fourth of July weekend by nearly 4 percent from the year before. It was the 21st consecutive week of lower gasoline consumption in comparison with last year.
So far, however, the decline in American oil consumption is being offset by increasing consumption in China, India, Latin America and in oil-producing countries. The Energy Information Administration, a United States government agency, reported that world oil consumption rose during the first half of 2008 by 520,000 barrels a day compared with the same period in 2007 even though consumption in the United States and other industrialized countries declined by 760,000 barrels a day. ...
Governments in China, India, Taiwan, Thailand, Indonesia and Malaysia have cut subsidies at least modestly in recent months because of strains on their budgets, and further subsidy cuts are considered likely, especially if oil prices continue to go up. Once their consumers pay higher prices, they would be expected to cut their consumption.
“I see the pressure mounting on China big time,” said Fadel Gheit, an energy stock analyst at Oppenheimer & Company. Mr. Gheit said he could foresee oil prices going as high as $170 by the end of the summer before plummeting. “The faster oil prices go up, the more severe the correction is going to be,” he added.
China is thought to have stockpiled oil supplies in recent months to assure adequate reserves of diesel and gasoline for the Olympics and avoid embarrassing shortages while the country is trying to impress the world. Once the Olympics are over, some energy experts predict the Chinese will decide to cut subsidies further and try to control oil imports, easing demand on world supplies and helping to bring crude prices down.
Tuesday, July 8, 2008
How the Olympics are making gas more expensive
You may have noticed that the price for a barrel of oil dropped today, for the second day in a row. After I went out and bought a new Ford Expedition, I picked up some interesting information from The New York Times' coverage of the price drop: