by Jerome a Paris
Wed Jan 18th, 2012 at 10:41:11 AM EST
Oil demand falls for first time since 2009
Oil demand is falling for the first time since the 2008-09 global financial crisis as a result of a mild winter, high crude prices and the European economic crisis, according to fresh estimates from the International Energy Agency.
The industrialised nationsí watchdog said oil demand dropped by 300,000 barrels a day in the final quarter of 2011. Such a fall is rare: over the last decade, oil demand has posted drops only in the financial crisis of mid-2008 to mid-2009.
I can't help bring up again this graph, prepared by Luis de Sousa almost two years ago:
This not to dismiss all the explanations to the crisis linked to unsustainable intra-eurozone imbalances, but to suggest that one of the key reasons for such imbalances is the competitive hit received by the countries most vulnerable to an oil shock. And that what we are seeing IS an oil crisis - peak oil translates into higher prices, which eventually causes lower demand (in those countries which are price sensitive, i.e. mostly the Western world, as a large portion of the emerging economies subside fuels) - and this is accompanied by widespread pain, as people have to do with less, or with more expensive oil, and need to reduce their consumption of everything else as a consequence. It also worsens commercial deficits, which hurts first the countries with a less favorable intra-eurozone position.
With oil production basically flat since 2005 (and a big chunk of any increases there have been have come from lower-energy-density fuels like biofuels), and demand still increasing massively in various parts of the world (oil producing countries, who do not really feel the price increases, fuel subsiding middle income countries, and fast growing places like China), we have a crunch, and it looks like it's hitting the weaker parts of Europe especially hard.