A huge fall off in demand? ?We actually haven?t seen it yet!?
3 Dec, 2008 11:08 pm
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Andrew Sutton, an oil market expert, gives Scitizen his opinion on what is happening with oil demand. He argues that the market are ?selling the news? of a huge fall off, and he invites us to watch closely how the energy demand of emerging economies develop. (Special dossier - Oil demand around the world: suppression or destruction? 2/4)
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There are really two components: a piece of demand is really falling down, because of the slowdown in the United States and in some of the European countries; another piece of this happens to do with perception though. There is this perception that there is going to be a huge fall off in demand that we actually haven’t seen yet. It seems like, to one extent, the markets are “selling the news”, but in all reality I don’t think that all that news has happened yet. In the US, we’ve seen a pretty significant slowdown, but everybody I talk to says: “there’s just as many cars on the road as there ever were”. There is a little bit of a disconnect in terms of what is going on and what people think is going on.
Would you say we are looking at demand destruction (structural) or demand suppression (temporal)?
There is a bit of energy demand destruction going on, specifically for the United States. But a bunch of factors are playing a role too: unemployment, sky rocking food prices... it’s not just energy demand it’s demand for other consumable goods as well.
What I’m really concerned and looking at in particular now are the BRIC countries [Brazil, Russia, India and China] to see how they continue to hold up, in terms of their energy demand. They have been the ones that have really been pushing forward, the Chinese and Indian economies in particular. They have been growing at very fast rates, and that consumes a lot of energy. If they can continue to maintain that growth, we’ll see demand overall not really change that much.
Interview by Olivia Sohr
Read also:
Oil demand around the world: suppression or destruction?
“We could have a tighter market once again from around 2011 onwards”
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Thursday: Energy Demand Trend in China, by Paul Ting, a Chinese oil market expert
Friday: “Higher and lower oil prices may affect demand, but the effect will be very limited” - Interview with Ali Hussein, oil consultant and former OPEC officer.
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