Gasoline Price Changes - Federal Trade Commission

Million Barrels per Day
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
-0.1
Source: IEA
THE DYNAMIC OF SUPPLY, DEMAND, AND COMPETITION
Figure 2-6: 2004 Predicted vs. Actual Crude Oil Demand Increase,
Million Barrels per Day
Predicted Demand Increase
Actual Demand Increase
US Other North
America
Europe China Other Asia
(inc. India)
Country or Region
Middle East Latin
America
Rest of
World
This phenomenon was not limited to crude oil. Other basic commodities that form the
basis for expanded growth in new economies, such as steel and lumber, also saw unexpectedly
rapid growth in demand, along with higher prices. For example, from January to August 2004,
the price of hot rolled sheet steel, the industry’s benchmark, almost doubled. 45 The growth in
overall world demand for these other commodities also surpassed projections.
China provides a significant example of rapid economic growth accompanied by
substantially increased demand for crude oil. During 2004, China’s annual demand for oil
climbed by almost 15 percent. 46 China’s economic growth in various sectors, manufacturing
boom, and new first car owners appear to have driven much of the world’s increased demand for
oil. Indeed, over the past five years, Chinese demand has been the source of roughly 25 percent
of world oil demand growth. 47
Other regions also exhibited much stronger than expected demand for oil in 2004. The
countries from the FSU, as a group, increased their demand for crude oil by 3.6 percent over the
previous year. The Middle East increased demand by 5.7 percent, and North America and
Europe increased demand by 2.1 and 1.7 percent, respectively. 48 On a worldwide basis, demand
was 2.09 million bpd higher than analysts had forecasted. 49
CHAPTER 2: WORLDWIDE SUPPLY, DEMAND, AND COMPETITION FOR CRUDE OIL 27