Thursday, July 31, 2008

Crude oil consumption in China grew while the world total didn't

A few days ago, James Hamilton had a blog post on the global oil market. He puzzles over this set of facts: From 2005 to 2007, Chinese crude oil consumption went up by 860,000 barrels/day, while global output dropped by 30,000 barrels/day. How could this have happened?

One element of an explanation could be like this. We know that China produces a lot of widgets. Chinese market share in world production of widgets has been growing fast (e.g. see this graph with growth of Chinese exports to the US). The production of widgets requires energy. Chinese `market share' in energy consumption should rise with the gains in Chinese `market share' in manufacturing production. As manufacturing work shifts to China, it would look like Chinese GDP is incredibly energy-intensive, while other locations would seem less energy intensive.

By the above calculations, China's consumption went up from 8% of world crude oil output to 9% from 2005 to 2007. That's roughly consistent with Chinese share in world merchandise exports.

1 comment:

  1. How one wishes the supplier to the world - China would openly give numbers for us to understand its economics.

    ReplyDelete

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