Because the US is the largest consumer, it can control price unilaterally until it becomes a non-consumer. China and India cannot grow their consumption over the next fifteen years fast enough to cause the price to increase if we are removing 25% of the current world demand over the same period. The world can't make ICE cars that fast and they can't buy them that fast. You can't ship our used SUVs to them because they don't have enough roads to use them. So, we are in a position to make sure that our transition off of oil is not accompanied by high oil prices because we dominate the demand in the market.

Chris

Slowing from 15-20% to 10%. Sure growth is slowing I'm not saying its not but its been slowing since 2006 and will continue to slow and the increase in oil demand is declining but this is not yet a overall decline in oil consumption globally. And its not a fast process demand declines cannot be used to justify monthly changes in oil price. Demand did not suddenly decline in July-August the world economy simply cannot respond that fast.

And the graph I gave of the rest of the world does not show and overall decline.

Slowing growth rates is not the same as and absolute decline in demand and from the graphs its taken years of high prices to slow the worlds economy. It will take years before demand trends downwards.

People claiming demand destruction as the reason for the current pricing changes are using a variable that changes slowly over a period of years to explain events that happened over a few months.

These two variables operate over completely different time scales. And further more given the data we have on export land any changes in consumption patterns in importing countries have bee canceled by growth in producing countries.

Bottom line is in my opinion 2008 is not markedly different from 2007

http://www.imf.org/external/pubs/ft/survey/so/2007/res1017b.htm

ccording to the latest forecast, global growth would slow from 5.2 percent in 2007 to 4.8 percent in 2008, down from the 5.4 percent rate registered in 2006. The largest downward revisions to growth are in the United States, and in countries where financial and trade spillovers from the United States are likely to be the largest.

In the United States, growth is now projected to remain at 1.9 percent in 2008, the same rate as in 2007 and a markdown of almost 1 percentage point compared to the IMF's previous projections. U.S. growth is down from 2.9 percent in 2006.

Ongoing difficulties in the mortgage market are expected to extend the decline in residential investment, while higher energy prices and weaker house prices are likely to dampen consumption spending, the IMF said. In the euro area, growth has been marked down to 2.1 percent in 2008, and in Japan it is now expected at 1.7 percent.

These numbers are still not negative we are still talking about positive growth rates and implicitly increases in oil demand albeit at a slower rate. And further more outside of housing and the auto industry most of this decline is in the financial sector which is not a energy intensive part of the economy.
The only slowing part of the economy that uses significant quantities of oil is the housing industry.

But again this decline has been happening for some time and prices have been rising through out the decline period.

I'm not going to drag in a number of links but you have plenty of information available that show housing starts have slowed dramatically over the last several years. Outside of the decline of housing other economic indicators are just now starting to turn to slower and slower growth rates.

Bottom line is I see no indication that we have yet hit the point that significant overall demand destruction plays a large role in the supply and demand equation for oil. Demand is still quite healthy.

I do believe at some point as the world wide recession begins in earnest we will see demand decline in concert with supply declines if this results in lower prices long term slowing the rate of increases or flat prices for oil is almost impossible to predict. But I can't see how you can take the worlds current economic data and come to the conclusion that demand for oil has dropped. At best the rate of increase in demand has slowed some right now in importing countries. I even agree its gone slightly negative for the US.