To illustrate this point, you simply need to examine the potential for
growth in the Chinese automobile industry. At the moment, domestic
Chinese automobile demand is rising rapidly toward two million vehicles
per year. There is a remarkable parallel between U.S. automobile demand
in 1910 to the Chinese automobile demand today. Here are some
statistics: China is producing one car for every 600 people, which equates
to the U.S. automobile penetration in 1910. By 1920, U.S. car production
and consumption jumped tenfold to one car per 60 Americans. If
China’s car production follows that same trajectory, it would equate to 21
million additional cars per year in a decade’s time. That means China’s
automobile ownership would be about 210 million by 2015, and approaching
the number of vehicles owned by Americans at 217 million.
Given that U.S. gasoline consumption is about nine million barrels per
day, it is easy to see how China’s consumption can rise dramatically.
Based on 2005 data, the world is consuming approximately 83 million
barrels of oil per day, with production at about 84 million barrels per
day. That leaves a cushion of one to two million barrels per day, which
typically gets lost in the event of a supply disruption, like the Venezuelan
strike in 2003, the Yukos-Kremlin problem in 2004, and the Hurricane
Katrina impact in 2005. I think that oil consumption worldwide, at
current price levels, will reach at least 100 million barrels per day in 20
years. In fact, if my view of an increase in demand from Asia alone in the
next 17 years will add an additional demand of 27 million barrels per
day, then the daily demand will equate to 107 million barrels per day
without any increase in demand from the rest of the world. The question
is whether production will be able to keep up with that kind of demand.
Not surprisingly, capacity can increase not only as prices rise to
support additional production, but also as demand for oil slows with the
30 THE END OF OIL
TABLE 1.1 Oil Demand Growth
Year China Asia exChina Rest of World Total World
2005 4.10% 0.79% 1.23% 1.39%
2004 16.88% –2.90% 4.61% 4.40%
2003 13.84% –4.50% 2.32% 2.01%
2002 5.78% –0.74% 0.54% 0.65%
2001 1.58% 0.24% 1.11% 1.00%
Source: Oil Market Intelligence Numerical Data Source.