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Strategies & Market Trends : Commodities - The Coming Bull Market -- Ignore unavailable to you. Want to Upgrade?

To: craig crawford who wrote (246)	6/14/2001 7:31:44 PM
From: craig crawford	Read Replies (1) \| Respond to of 1643

Wednesday June 13, 3:33 pm Eastern Time SmartMoney.com - The Long View The Short and the Long of Energy Prices By Jersey Gilbert biz.yahoo.com But he's looking even further ahead to China, India and the other 80% of the world's population on the brink of industrialization. He thinks these are the wildcards that have the potential to keep the pressure on oil production for years to come. Even assuming energy suppliers can keep up with rapacious American energy use, just supplying China's emerging needs without serious impact on oil prices will be a real challenge. Industrialization has always been an explosive force in energy consumption. Consider what happened during one stretch of Japan's rapid postwar growth. Tozzi points out that in 1960, consumption per person was 2.6 barrels of oil equivalent a year. By 1980, the average Japanese consumer was burning through 15.5 oil-equivalent barrels a year. (Oil-equivalent barrels are units that measure energy consumption either in the form of petroleum or natural gas.) Conditions in South Korea in 1970 were more like those in China today, with consumption levels at 1.9 barrels of oil equivalent a year. By 1994, usage was up to 14 barrels per person. Consumption in China today stands at 1.1 annual barrels per capita. Even if China's modernization drive doesn't match what happened in Japan or Korea, an increase in average consumption levels of just five barrels per person would send China's daily energy use soaring from five million barrels today to 25 million (assuming the population stays the same). That's enough to raise the world's daily energy requirements by at least 25% over the next 20 years. We'd need about 1% extra a year (on top of the developed world's demand growth, which has been at least 1.5% a year, and lately much more). And that says nothing of the potential increase in population and per-capita energy usage among India's one billion residents. China only produces about 3.2 million barrels a day. So far, exploration has yielded few noteworthy oil discoveries. Hopes for big natural-gas finds in Xinjiang province have remained unfulfilled. The lack of local resources has meant that 60% of China's energy output is fueled by coal. That dependence has led to some of the world's most polluted cities. It isn't a situation that can go on forever. Tozzi calculates that in order to bring coal dependence down to the world average of about 28%, the Chinese would require an extra eight million barrels of oil equivalent a day, or about 10% of current world output. Any further growth from population or increased energy use would be on top of that.