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Author: deadcat2 Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1152  
Subject: Re: Is there a reason? Date: 10/19/2008 2:08 PM
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Here's an interesting tidbit that, if correct, should allay fears about the demand for oil in the coming years (and especially this year and next):


http://articles.moneycentral.msn.com/Investing/JubaksJournal......

Growing demand from the rising economies (and the increasingly wealthy consumers) of China, India, Brazil and the Middle East is still going to drive up the long-term price of everything from oil to zinc. In fact, the current global financial crisis could make the commodity boom that much stronger when it does return.

How could that be?

The economies of the developed world are indeed slowing, and the high prices of commodities, especially of oil, have indeed reduced demand. But the reduction in demand isn't nearly as big as you'd believe if you read just the headlines.

Here's the headline from the Oct. 11 Los Angeles Times: "Oil prices slip on market woes." Read just to the end of the columns printed on the front page of the business section and you'll come away with this: The International Energy Agency, or IEA, the paper reports, cut its demand forecast for 2008 to 86.5 million barrels a day, down 240,000 barrels.

What you won't discover unless you follow the story to the bottom of Page C3 is that the reduced projection is still 0.5% higher than oil demand in 2007. The world is near recession, and drivers are cutting back on gasoline use because of high prices, yet global oil demand is still going to increase in 2008, according to the agency's projections.

For 2009, the IEA also cut its demand projections -- to 87.2 million barrels a day. Unless my math has completely deserted me, that's more than the agency projects for 2008 demand. In other words, in the midst of what looks like a serious recession in the developed world, demand for oil is projected to keep growing.
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