Saudi Arabia Worries About Peak Demand

abarrelfullabarrelfull wrote on 16 Feb 2010 09:39
Tags: demand peak saudi-arabia

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After my scathing remarks about the peak oil report yesterday, it seems that worries about peak demand (not supply) are becoming widespread. Even Saudi Arabia is worried about it.

Saudi Arabia must be “very serious” about any possible peak in oil demand, which is an “alarm” for OPEC’s biggest exporter to diversify its economy, a Saudi Oil Ministry adviser said.

He doesn't say if he agrees that demand is peaking, but only that the view should be taking as a serious risk. He sees it as a wake up call for oil producers.

My view is that the only thing that could create a plateau in demand is very high prices, which would most likely have a significant braking effect on the global economy. As long as enough oil is available at reasonable prices, which has always been the long term goal of the Saudis, then growing car ownership will drive oil demand in emerging economies. Stagnant demand in the OECD is not a new phenomena, and is basically irrelevant.

Consumption of oil in developed nations of the Organization for Economic Cooperation and Development will decline by 0.02 percent this year, while non-OECD usage will grow 4 percent, allowing total world demand to expand 1.8 percent to 86.5 million barrels a day, according to the Paris-based International Energy Agency.

As long as Chinese & Indian consumers dream of buying their first car, the future of oil demand is secure.


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