Growing Asian middle class to propel oil use: study
Fri Sep 11, 2009 12:26am IST NEW YORK (Reuters) - A rapidly expanding middle class in China and India will provide the main engine for world oil demand growth in the coming years as families in developing nations buy more cars and appliances to go with their thicker wallets, according to a study released on Thursday.
The outlook could place a firm floor under global oil prices into the next decade after the first decline in world energy demand in a quarter century pulled them to lows near $30 a barrel this winter.
"The dramatic growth in the middle class, concentrated in China and India, provides a significant upside to the outlook for global oil demand growth in the next several years," according to PIRA, a New York-based oil consultancy.
"New entrants to the middle class are just the group most likely to produce rapid increases in oil and other energy demand," PIRA said in the study obtained by Reuters.
Since 2000, China and India combined have added more than 59 million people per year to the global middle class -- defined as people with an annual income of $6,000 or more -- representing over 75 percent of the world's increase in this group, PIRA estimated in its study.
Energy demand growth in China and India were major drivers behind oil's dramatic multi-year spike to near $150 a barrel in July 2008, though prices have since fallen back under the weight of the recession.
"Although $6,000 per capita may not sound like a great deal from the perspective of the industrialized world, for a household of two to three persons it represents household income of between $12,000 and $18,000," PIRA said.
"This is certainly enough income to support the purchase of many energy using appliances, and may well be enough to allow for the purchase of a vehicle for personal transportation."
PIRA said that the experience of other Asian economies over the past 30 years implies that increases in average GDP per capita in China and India could spell a period of rapidly rising oil demand in those countries.
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