Oil is the lifeblood of the global economy. Not only is it largely irreplaceable in transport, but it is an important source of electricity generation as well as the principle feedstock for entire industry groups such as Pharmaceuticals, Plastics, Fertilizers, Herbicides and Pesticides, Medicines and Textiles.

The table below details the main users of oil globally (as well as a few other countries for interest’s sake including NZ). The top 7 consumers of oil consume over half of the world’s production.

Oil Consumption Ranking (2007/08)

The US uses a quarter of the world’s oil and is by far and away the largest consumer both in absolute terms (20.7m barrels per day) as well as on a per capita basis (27 barrels per person per annum). But the US is a relatively mature oil market and as such, it’s demand growth rate has been relatively pedestrian for a number of years (currently negative as it deals with the current recession).

The same cannot be said of the two vital emerging markets; China (ranked 2^nd) and India (6^th).

Between 2004 and 2007, China accounted for 34% of global demand growth (with the Middle East contributing 25% and Emerging Asia 17%). By comparison, despite it’s absolute size, the US contribution to the growth in demand was only 7%. It is worth noting that together, China, the Middle East and Emerging Asia accounted for 76% of the global growth in the demand for oil over the same period.

Despite the fact that China is already the second largest oil consumer in the world, on a per capita basis it is still in it’s infancy (<2 barrels of oil per person). India is even further behind (<1 barrel per person).

Yet, in the next two decades, China's oil consumption is expected to grow at a rate of 7.5% per year (and India’s by 5.5%). China is huge, rich, highly technical, fast growing, energy hungry and ‘car crazy’.

Where is this extra oil going to come from once the current recession is over and the relentless growth in the demand for oil re-asserts itself?