Oil's Importance to the World Economy
A Look at the Current, and Future, Global Consumption of Gasoline
Mar 30, 2009
Since the horse and carriage gave way to the car as the main method of transportation oil has been vitally important to the world economy. Its importance has risen to the extent that in a world suddenly without oil, all the minor and major distribution systems that allow economic transactions on a more than local basis would fail and the world economy would collapse.
The Current Level of World Oil Consumption
According to the EIA, the world currently consumes 85.64 million barrels of crude oil daily – roughly equivalent to every single person on the planet using 2 litres of oil a day. With the current market prices of a barrel of oil being $51, global consumption of oil costs $4.3 billion every single day, or 62 cents for every person.
Of course, the global distribution of oil consumption is not evenly spread out as developed and oil-rich states consume far more oil than less developed states. Also, all of this oil is not simply consumed with no end product. Oil is involved in the manufacture of a large number of everyday items, such as plastics, asphalt, or fertilizers.
However, the majority of this oil is refined into gasoline, jet fuel, and diesel, to be used for transportation. According to Ran Goel in his 2004 New Political Economy article “A Bargain Born of Paradox”, oil’s role in fuelling transport oil is currently non-substitutable – there is nothing in the world that, within the bounds of its infrastructure, could replace oil.
Future World Oil Consumption
The world has experienced growth in its consumption of oil for the majority of the years since the early 1900s. This trend is likely to continue into the future with the majority of the growth in oil consumption coming from two sources – India and China.
Together, these two countries account for over a third of the world’s population – 2.5 billion people – and have been following plans to allow each of them to rapidly economically develop.
The Rise in China's Oil Consumption
China’s oil consumption has already risen from in 2 million barrels per day (bpd) in 1990 to 6.93 million bpd now. Following this, the EIA estimates that Chinese oil consumption will rise to 15 million bpd by 2030 – adding a further 8 million barrels, or around 10%, to the current world consumption.
However, if we consider that Chinese oil consumption currently stands at least than one litre a day, compared to the USA’s 11 litres, then we can begin to understand the potentially huge rise in oil consumption that China represents. In fact, if Chinese per capita consumption of oil rose to the same level as the USA then the world’s total oil consumption would double to over 160 million bpd.
India's Future Potential Oil Demands
India's oil consumption, reflecting its slower rate of economic growth, currently stands at 2.7 million bpd and is expected to grow to 4.5 million bpd by 2030. However, with India’s huge, and growing, population estimates of India’s future oil consumption could easily be revised upwards based on small increases in predicted levels of economic growth.
Also, with the recent release of the 100,000-rupee ($2,000) Tata Nano car, with its aim of expanding the India car market by 65%, India’s potential to drive up future world consumption of oil should not be underestimated.
 |
