Far too little attention is paid to the demand side of all energy markets. For sure, production has sizzle, but consumption is king. No demand means no production.
And so I was delighted to read Floyd Norris' must read piece in the NYT that does a great job of collecting in one piece many of the most important facts about the demand side of the global oil market.
I will pull out from Norris' piece just one fact, among many important ones, to highlight here.
The IEA in its 2012 World Energy Outlook projects that US oil consumption will decline by one-third by 2035. Or to put it another way, US oil consumption will decline on average by about 1% per year for the next 23 years. That is an astonishing fact.
Reducing US oil consumption and surging domestic oil consumption are putting the US on a path toward becoming oil independent and even a net exporter. Indeed, falling consumption and rising production are both equally strong factors in ending the decades of the US importing foreign oil.
But the only way for the USA to free itself from the global pricing of oil and oil price shocks to our economy is to use less oil. And so the reduction in US oil consumption is especially important and great news indeed!