Building a world of
resilient communities.

MAIN LIST

 

Explosive Oil Consumption Growth in the Top Oil Exporting States

The top 14 oil exporting states experienced high economic growth in 2005 and the first half of 2006, leading to high domestic consumption of oil. The rates of increase in oil consumption are in the high single digits or low double digits in all top exporting countries except Norway, as estimated based on the Energy Information Association’s (EIA) country studies in Figure 1 below. The high consumption of oil can be attributed more exactly – besides simply “economic growth” -- to higher sales of automobiles in all exporting states and higher production of petrochemicals in the Middle East.

Sales of automobiles are increasing at a high rate in the major oil exporters. Sales of automobiles in 2005 increased at mid-double digit rates in the Middle East and Venezuela, and high single digits in Russia (see Figure 1 below). Although exact information on gas mileage of the automobile sales is not available, it can be inferred that gas mileage per vehicle is declining, as major car dealerships report that the mid-to-large SUV luxury market is the fastest growing sector in the Middle East.

The Petrochemical industry in the Middle East is likewise experiencing very high rates of growth. The Middle East became the world’s large producer of petrochemicals in 2005. Production of ethylene based products in the Middle East is projected to grow approximately 20% annually to 2011, according to the National Petrochemicals and Refiners Association. The rise is driven by the desire of the Middle Eastern countries to increase domestic employment and their manufacturing base. Petrochemical production is estimated to comprise 11.5% of oil consumption currently, and this percentage is set to rise.

Economic growth in the top oil exporting 14 states, and in implication automotive sales and petrochemical growth, can be viewed as continueable, as growth has been driven by strong balance of trade surpluses from oil revenues – allowing the governments to finance growth through infrastructure projects -- and the desire to provide high numbers of younger people who are entering the workforce with work. Trade surpluses and median ages for the top 14 exporting countries are provided in Figure 1 below. All Middle Eastern countries had very low median ages and very high trade surpluses in 2005, and nearly all top exporting countries had very strong trade surpluses in 2005.

At a time when questions exist concerning the ability of the top 14 states to increase production, dramatic increases in domestic consumption of oil in these states is ominous. Morgan Stanley Hong-Kong based analyst Andy Xie in 2005 wrote that the only reason the price of oil was going up was because of growth of Chinese demand. This view is ridiculously incomplete. Oil consumption growth in the major exporting states – OPEC and Russia – without corresponding increases in production, will lead to declines in the amount of exportable oil, leading to increased competition for the remaining exportable barrels of oil.

Figure 1: Top World Oil Net Exporters – GDP, Population, Balance of Trade and Automotive Sales Growth
(OPEC members in italics)


  Country Net Oil Exports (million barrels per day) (1) GDP Growth (2005) (2) Oil Consumption Growth (3) Population Growth Rate (4) Median Age (4) Growth in Auto Sales (2005) Balance of Trade Surplus (Deficit) (2005) (3)
1 Saudi Arabia 8.73 6.3% 11% 2.18% 21.4 10% (5) $120Bn
2 Russia 6.67 6.0% 7% -0.37% 38.4 7.3% (6) $120Bn
3 Norway 2.91 2.2% Below 2% 0.39% 38.4 -4.0% (7) $53Bn
4 Iran 2.55 5.3% 5.2% 1.1% 24.8 10% (est) (8) $12.9Bn
5 Venezuela 2.36 6.0% 3.3% 1.38% 26.0 55% (06) (9) $28.2Bn
6 United Arab Emirates 2.33 6.5% 10% 1.58% 28.1 108% (GM only) (10) $43Bn
7 Kuwait 2.20 6.2% 7% 3.59% 25.9 40% (GM only) (11) $32.2Bn
8 Nigeria 2.19 6.2% n/a 2.38% 18.7 n/a $26.2Bn
9 Mexico 1.80 3.5% 2.2% 1.16% 25.3 n/a (20% in 02) (12) -$10Bn
10 Algeria 1.68 4.9% n/a 1.22% 24.9 n/a $27Bn
11 Iraq 1.48 n/a n/a 2.66% 19.4 n/a -1.8Bn
12 Libya 1.34 5.0% n/a 2.3% 23.0 n/a $20Bn
13 Kazakhstan 1.06 8.0% n/a 0.33% 28.8 n/a $12.6Bn
14 Qatar 1.02 7.1% n/a 2.5% 31.7 101% (05) (13) $18.2Bn

Footnotes:

  1. According to the EIA (2004 Data)
  2. According to the IMF http://www.imf.org/external/country/index.htm
  3. Estimated from EIA country studies: www.eia.doe.gov/emeu/cabs/contents.html
  4. CIA World Factbook: https://www.cia.gov/cia/publications/factbook/geos/us.html
  5. Saudi Arabia: http://www.buyusainfo.net/docs/x_7244764.pdf
  6. Russia: http://www.autofieldguide.com/columns/0805strat.html
  7. Norway: http://www.eubusiness.com/Finance/060714095549.e4gn82ra
  8. Iran: http://www.payvand.com/news/03/oct/1073.html
  9. Venezuela: www.venezuelanalysis.com/news.php?newsno=1941
  10. UAE: http://www.ameinfo.com/91293.html
  11. Kuwait: www.tradearabia.com/tanews/newsdetails_snMTR_article108067_cnt.html
  12. Mexico: http://www.findarticles.com/p/articles/mi_m0BEK/is_10_10/ai_93230214
  13. Qatar: www.einnews.com/qatar/newsfeed-qatar-automotive
Editorial Notes: Randy Kirk is a senior financial analyst at a investment management firm in San Francisco, California.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

 

This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.


2014 biggest year ever for solar, but oil price threat looms

Will only time tell whether it will be enough to keep solar panels cheap …

Rethink the Grid: Personal Power Stations

Rethinking the grid is quickly emerging as one of the hottest topics.

Goldilocks Is Dead

For oil, the Goldilocks zone has ceased to exist. This will have staggering …

US enters undulating crude oil production plateau in 2015

Feel-good-outlooks make the TV audience happy, but sleepy.

Global Shale Fail: Oil Majors Leaving Fracking Fields Across Europe, Asia

As Post Carbon Institute has pointed out in two major reports, estimated …

Peak Oil Review - Mar 23

A weekly review including Oil and the Global Economy, The Middle East & …

Cheap oil, complexity and counterintuitive conclusions

The chief intellectual challenge of our age is that we live in complex …