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China's growing auto industry could affect U.S. gas prices

A man pumps gas into his car at the Gas & Shop gas station in San Francisco, Calif.

TEXT OF STORY

JEREMY HOBSON: Well while we're talking oil the head of the International Energy Agency had a warning today for oil consumers and producers. Prices are getting too high and could threaten the global economic recovery.

Fatih Birol spoke to Marketplace this morning.

FATIH BIROL: The oil prices were not the primary driver of the financial crisis but they did play a key role in the run up to the financial crisis by reducing the business and household's income.

And he says they could do so again. Though it's worth mentioning the U.S. is no longer the only game in town when it comes to energy demand. Extraordinary growth in China's car market means a lot of new drivers are competing for the global supply of gasoline.

Marketplace's Alisa Roth reports.


Alisa Roth: Most of China's demand for oil is industrial, to power factories. In the U.S., most of the demand is consumer -- we need gas for our cars.

Stephen Schork publishes an energy industry newsletter. He says oil is oil. So more demand from China could end up costing us more.

Stephen Schork: Everything is derivative of oil prices. So as goes obviously the price of crude oil, so shall go the price of gasoline.

During the recession, America's demand for oil dropped. But gas prices didn't drop much. That's because China picked up the slack, says Dan Rosen, a consultant who works there. Since then, China has overtaken the U.S. as the world's largest market for cars.

Dan Rosen: These big Chinese growth numbers for automobiles are important, but what's most significant about them is that there's 300 million more to come over the next couple of decades.

Rosen says it's hard to predict exactly how much all those cars will increase gas prices: One question will be how often Chinese drivers decide to hit the road.

I'm Alisa Roth for Marketplace.

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