Global oil demand slows

Oil rigs in Culver City, Calif.


Kai Ryssdal: The United Arab Emirates is a member of OPEC, so you'd like to think the country's energy minister knows whereof he speaks when he's talking about oil prices.

That crazy comment I mentioned came when he was asked about a meeting that Saudi Arabia has proposed, a gathering of oil buyers and sellers later this month to talk about stabilizing the market.

The International Energy Agency said today that's already happened: that global demand has actually slowed to a third of what it had been predicting.

Whether or not that'll do anything to prices, well, here's Marketplace's Dan Grech.

Dan Grech: Demand is definitely falling in the U.S. The evidence is in grounded airplanes, less driving, falling truck sales.

The IEA projects U.S. demand for oil will contract by up to 2.5 percent this year. In the past, that would have been enough to lower prices. Not anymore, says energy expert Chip Groat with UT Austin.

Chip Groat: We were seen as the governor of demand, but clearly China and India and other developing parts of the world have outstripped us as far as impact on global oil and gas supplies. And so, for how the future will look, we have to look to them.

The IEA says for prices to go down, we need to reduce demand. That means cutting energy subsidies in emerging countries and keeping taxes in place in the developed world.

But supply is a bigger problem. Existing oil fields are drying out, while new ones have yet to come online. And OPEC says it has little spare pumping capacity.

Lester Lave is an economist with Carnegie Mellon University.

Lester Lave: The overall economy of the United States has been shaped for 100 years by inexpensive and declining fossil fuel prices. That era is over.

Lave says it would be easy for the U.S. to put pressure on China and India to cut back on their oil consumption, but he says we need to put our own house in order, too.

Lave: We're the 800-pound gorilla in the room, or rather, we're the five-mile-per-gallon Hummer that is consuming the world's petroleum.

Lave says overcoming the current oil shock will require Americans to make wholesale lifestyle changes and, more than likely, take a lot of short-term pain.

I'm Dan Grech for Marketplace.

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TO DO LIST: USA needs to reduce its demand for goods from China and India, screw the oil traders at Wall Street due to unscrupulous speculative trades, and finally blame Bin Laden and his gang for putting this oil misery to the world. Not only this misery, but the misery that we experience at airport security checks. Bomb and acquire Iraq (and even Iran, what the heck!!!) and bring the oil home so we, the tax payers, get compensated for the billions of dollars being spent there. I am tired of this crap!!! If we cannot secure the oil in Iraq and bring those home, then might as well get the troops out and get me the billions of dollars being spent there and they can continue to raise oil prices. What is $4 or $5 per gallons if we have the billions of cash on-hand. I cannot live with the tiny stimulus check that Uncle Sam gave me, i.e., what could $225 stimulus check do for middle a income family of 4, that is a crap shit. Won't last for a month or two of gasoline expenses. So two choices fo the administration, bomb and acquire Iraq and take the oil home or give the billions of dollars to every citizen of the USA (particularly the middle, fixed income individuals) and let them live happily. What's the household population of the USA? Divide the billions ($) spent in Iraq by the US household population (ignore the rich people) and give the poor and middle income families that money and see what the outcome would be. Everyone will be happy.

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