Finaly we got to the point where too high prices is going to lower demand.
Quote:
The Energy Department, in a monthly report, indicated that high prices are cutting oil consumption more than expected in the industrialized world. Consumption is now expected to fall by 240,000 barrels a day in 2008; last month, the department forecast consumption would be unchanged from 2007 levels.
That report calmed a market that earlier sent oil up more than $3 on a projection by the International Energy Agency that said global demand will continue to rise, especially in China.
Light, sweet crude for July delivery fell $3.04 to settle at $131.31 a barrel on the New York Mercantile Exchange.
A weekly report from MasterCard offered additional evidence that high prices are cutting gas consumption: MasterCard's SpendingPulse survey found that demand for gasoline fell 3.8 percent last week compared to the same week last year, and is off 5.2 percent, on average, over the last four weeks compared to the same period of 2007.
....
Meanwhile, the IEA, in its own monthly report, cut its demand growth forecasts, projecting that global demand for petroleum products such as gasoline, diesel and heating oil will grow by 0.9 percent, or 800,000 barrels a day, in 2008. That's down from the 1.2 percent, or 1 million barrels, the IEA forecast earlier this year.
However, the IEA, an energy adviser to Western industrialized nations, also said demand for fuel for reconstruction work in the aftermath of May's earthquake will boost Chinese oil demand by 5.5 percent this year, a slightly higher forecast than in previous reports.
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IMO, in China the earth quake will lower consumption rather than increasing it.
Yes, they may need fuel for reconstruction, but the economy will take a hit and less cars will drive on devastated roads.
China's economy is not as strong as to deploy huge reconstruction projects without bearing a burden on the economy.
Also if oil consumption is lower in the West I don't see why it shouldn't be so in the developing world.
I may be wrong of course.