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Note that the UK had practically no increase in consumption, versus a fairly rapid increase in consumption in Indonesia, but UK net exports crashed faster than Indonesia's.
Also, at least at first, what I call the Phase One decline, I expect that the cash flow from export sales will increase, even as export volumes fall, because of rapid increases in oil prices, which will create some problems for exporting countries that try to reduce domestic consumption.
And, we may see some efforts to reduce exports, even beyond the effects of declining production and rising consumption. If exports are going to crash anyway (i.e., the big importing countries are toast no matter what), why not conserve your oil, maximize the per barrel price, and try to use your remaining oil to develop a less oil dependent lifestyle?
I agree with all 3 of your point here - but if we both acknowledge these points then price rise in crude will accelerate further (2nd order acceleration!!) which will pinch demand drastically - hence my conclusion that the downslope of oil production will be less steep.
I live in the UK and am aware of the flat consumption. For example many people i know have ben moving to cars with 5-10+ MPG BETTER than they had before. i have just spent ove £1500 on energy efficient measures around my house as have many i know.
I read with much interest your take on the housing markets and related economic posts here and the outlook for a recession (aka reduced oil demand) is indeed strong.
Marco.
Marco,
Is demand going down in the UK? Do you have any specific references you can share on his topic? Thanks
WT explained that demand has been essentially flat
From: http://www.cslforum.org/uk.htm
Good tables of production/consumption for UK
Marco.
Thanks for the good reference. After re-reading your above post, it seems you mean that demand will be reduced in producing countries when prices accelerate further (2nd order), which implies that we are not at that point now. Do you see consumption in the UK going down as a result, or are you referring to the developing producer countries?
I see 3 divisions:
1) Slightly reduced demand in OECD countries as the price starts to bite - but remember we are highest up the food chain and will survive the highest prices for longer.
2) 3rd world/developing countries are already seeing severe shortages. A previous post 2 weeks ago listed about 20 instances of this, so demand is already being destroyed here rapidly. Major problems soon. A good example is that world oil production is down 2% in 2 years yet OECD consumption is up?? HOW? Simple - we bid up and destroyed consumption elsewhere.
3) The third divison I see, and WT has pointed this out, is hoarding by oil producing countries, tempered by their need for export revenues where their reduction in consumption is likely to be similar to the reduction in OECD countries.
There is no doubt that sustained +$70 oil is curtailing demand. it must as world production of all liquids has been flatish since JAN 2005. WT's ELM puts extreme upward pressure on price as noted before, with the potential to wreak havoc on demand and I believe this is the only achilles heel in the ELM. (Would you agree WT?). I agree that essentially net exports decline exponentially but i refuse to believe this wouldn't nock the price on by the same order of magnitude. It's just that we appear to be on the cusp of that happening so right now it is conjecture.
Marco.
I think this is getting off the topic of oil production and heading into the way in which oil is traded. The flattening in UK oil consumption can be shown in the Nth Rock credit squeeze. This is because the countries you are referring to are beginning to shift the way they trade oil from US$ to €'s the problem hear is about the availability of credit not the availability of oil reserves. Under this scenario it is more a case of the last man standing, will oil be traded in $ € or cash in the local currency. The economic implications of this for the countries that are trading outside the US$ is profound. Even if say Iran further linits it's production without expanding it's € based bourse, it will cause pressure on, for examplke US housing prices. The lack of liquidity in markets will pinch oil exploration rather than increases in price.
Your reply is like that junk mail I get from loan companies and people that want to enlarge my penis/conservatory.
I am not refering to the broader picture hear Marco just this specific incidence. I think you have the cause and effect a little mixed up. Not that the supply is not flattening off but that your reasons are narrow in scope.