[gt1370a]

Here: article

At first, this just looked like the normal load of bull, until I read this quote:
"The big issue is what demand is going to be next year," David O'Reilly, the chief executive of Chevron, said by telephone. "High prices tend to attract higher production and higher supplies. The question then is, What will happen to the demand side? The fact is, we rarely know what is going to happen."

I have wondered for a while if these people who are predicting lower prices have some good reason to believe the economy is about to crash. I mean, EVERYBODY knows the supply issue now, right? But if the economy takes a big hit (say housing bubble pops hard) and demand drops to like 79 MB/day or less, the price of oil will fall right? This article says that the IEA predicts 1.7 MB/day growth, which doesn't seem to me would result in a big drop in price, but we know how accurate their predictions are.

I also wonder, the supply side has been analyzed to death with depletion rates and new fields, etc. Has anybody here really looked at demand? Take this into consideration:
-The airlines are scaling back, many are in bankruptcy.
-GM, Ford, Delphi, other autos closing plants.
-New housing construction (and everything associated with that) - levelling off?
-Employees from the above mentioned being laid off; others losing salary/benefits, have less disposable income.

How many barrels/day of reduced demand does that add up to? If this trend continues, will there be a supply cushion due to decreased demand soon? I have seen very little about this at any of the peak oil sites, the focus is always on supply.

[MonteQuest]

$this->bbcode_second_pass_quote('gt1370a', ' ') Has anybody here really looked at demand? If this trend continues, will there be a supply cushion due to decreased demand soon?

[Flow]

China has one of the two huge coal liquefaction coming online next year (2006). The other one is due in 2007. When they are both online, they will eliminate 60% of their import needs. They are looking at building more of these plants in the near future too.

Also, China's demand is projected to take a huge cut from what it has been in the past few years.

So I would say China is not as large a factor as some think them to be.

[MonteQuest]

$this->bbcode_second_pass_quote('Flow', 'C')hina has one of the two huge coal liquefaction coming online next year (2006). The other one is due in 2007. When they are both online, they will eliminate 60% of their import needs. They are looking at building more of these plants in the near future too.
Also, China's demand is projected to take a huge cut from what it has been in the past few years. So I would say China is not as large a factor as some think them to be.

[MicroHydro]

I understand the concern. The oil companies are worried about a dollar shortage in 2006. I am not worried. I have faith that Ben Bernancke is going to make plenty of dollars - so many that the fed will no longer report M3. I am long on all energy commodities.

[gt1370a]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('gt1370a', ' ') Has anybody here really looked at demand? If this trend continues, will there be a supply cushion due to decreased demand soon?

[aahala]

I've seen no stories that show hard figures pointing to lower demand.

There have been a number of countries that have had to reduce or
eliminate oil subsidies for their own citizens. These moves should reduce
demand there. Unfortunately, the counties aren't the big oil users to
being with.

[MonteQuest]

$this->bbcode_second_pass_quote('gt1370a', 'Y')eah, but how much of their oil use goes to make plastic junk to sell Americans? If we have less disposable income, and if big manufacturers here that use plastic junk are scaling back, won't Chinese demand drop anyway? I mean, why keep making that crap if no one is buying it?

[nocar]

According to the most recent statistics I conveniently can find, the earth has 6.100 billion people, of which 1.266 billion live in China, which means China has 21 percent of the earth's population. A fair share for China of any kind of commodity is 21 percent of the global production.
We should be very thankful for China's one-child-per-couple policy (which at times has been violently critized).
India now has 1.027 billion people, 17 percent of the earth's total, and of course their fair share is 17 percent. With a younger population (no one-child-policy), they are prognosized to overtake China in a few decades.


nocar

[Leanan]

China was trying to spiff up Beijing for the 2008 Olympics. They used such massive amounts of steel and concrete it caused price spikes, worldwide shortages, and hoarding. The price of steel doubled in a few months. It was like the 1970s all over again, only with steel and cement instead of oil.

But it was a one-time deal. They won't be hosting the Olympics again any time soon.

However...it was an interesting preview of what it might be like, if peak oil causes everyone to rush to build nuclear power plants, wind turbines, and solar panels. That was just one country, fixing up one city for company. What happens when dozens of countries are rushing to build new energy infrastructure, because their lives depend on it?

[MonteQuest]

$this->bbcode_second_pass_quote('Leanan', 'C')hina was trying to spiff up Beijing for the 2008 Olympics. They used such massive amounts of steel and concrete it caused price spikes, worldwide shortages, and hoarding. The price of steel doubled in a few months. It was like the 1970s all over again, only with steel and cement instead of oil.

But it was a one-time deal.

[Gary]

My question is this: when will China be in a position to comfortably stop supporting the growing USA debts? When China makes this change, will the USA be ready for it? How can the USA prepare for such an eventuality?

[MonteQuest]

$this->bbcode_second_pass_quote('Gary', 'M')y question is this: when will China be in a position to comfortably stop supporting the growing USA debts? When China makes this change, will the USA be ready for it? How can the USA prepare for such an eventuality?

[Permanently_Baffled]

$this->bbcode_second_pass_quote('', '
')Very good question. I would hazard a guess that when they can shift their export production to internal consumption they will shift those dollars to other projects than buying US debt.

[shakespear1]

Even if an economy tanks, there is still a core level of oil/gas consumption that simply will not go to zero. The interesting question would be how much elasticity does the demand side have on the lower side ?

This core demand level will continue to move us toward and beyound PO no matter what.

[Permanently_Baffled]

$this->bbcode_second_pass_quote('shakespear1', 'E')ven if an economy tanks, there is still a core level of oil/gas consumption that simply will not go to zero. The interesting question would be how much elasticity does the demand side have on the lower side ?

This core demand level will continue to move us toward and beyound PO no matter what.

[nocar]

$this->bbcode_second_pass_quote('', ' ')But I just do not understand how China/India can continue to grow economically if the western economies are stiffed.

[MonteQuest]

$this->bbcode_second_pass_quote('Permanently_Baffled', '')$this->bbcode_second_pass_quote('', '
')Very good question. I would hazard a guess that when they can shift their export production to internal consumption they will shift those dollars to other projects than buying US debt.