oil prices to keep rising as demand grows

FYI...From the abc

//A new Australian study says the problem in the two earlier oil shocks was with supplies of oil. This time, study author Professor Michael Wesley says, the problem is that demand is unlikely to subside.//


http://www.abc.net.au/news/stories/2007/11/25/2100509.htm

Oil prices to keep rising as demand grows

With world oil prices nearly touching $100 a barrel in the past week, we are living through the third great energy shock of the post-war era. But this time, demand from India and China means that prices are unlikely ever to go down again.

Since 2004, oil prices have risen on a scale similar to that of the first oil shock at the start of the 1970s, and double that of the second oil shock at the end of the 70s.

China's oil consumption has doubled over the past decade and India's has increased by two thirds.

A new Australian study says the problem in the two earlier oil shocks was with supplies of oil. This time, study author Professor Michael Wesley says, the problem is that demand is unlikely to subside.

"The growth in the consumption of oil and oil products by predominantly the United States, China and India is rapidly outstripping the ability of the oil market to supply those amounts and this will inexorably drive up the price of oil," he said.

Professor Wesley predicts that this time, the prices won't drop back.

"The previous two oil shocks in 1973, 74 and in 1979-1980 were supply-side shocks," he said.

"They were generated by the inability or the unwillingness of key suppliers to put adequate supplies of oil onto world markets.

"Now they were stopped and stopped reasonably abruptly when the suppliers simply restored supplies to world markets.

"There are supply-side problems this time, but even if all of those problems are resolved tomorrow, the demand-side pressures will continue to grow and will continue to put upward pressure on oil prices."

He says this time, rising demand in the growing economies of India and China and other countries in Asia means that higher prices will just continue.

"To give you an example, sales of cars in China are rising by 25 per cent, year on year," he said.

"There are expanding middle classes in both countries, in both China and India, and they are demanding lifestyles and modes of transport that are using modern energy.

"By modern energy, I mean both oil and oil products, gas and electricity - all of which are fossil-fuel-produced.

"So there will be an inexorable rise in demand for these products and it will continue to put upward pressure on prices."//