Today, the biggest source of growth in global oil demand cut subsidies that were exaggerating its appetite for the fuel. China, beginning Friday, is increasing the price of gasoline, diesel, and jet fuel by 17%, 18%, and 25%, respectfully. Their price is still below the global market equilibrium, but the increase should help to keep demand from growing as swiftly as their economy (which grew 10.6% in the first quarter of 2008). This should help the demand side of the equation a bit and helped oil prices slide a few dollars today. But the risk of continued increases in the price of oil and gasoline remains as supply struggles to suffice the demand of a growing world population and economy. In fact, large banks such as Credit Suisse and Barclays Capital predict non-OPEC oil production will plateau and even fall slightly in the coming years bringing $150+ oil prices.
In natural gas news, the EIA reported a weak build for US storage this past week to 1,943 billion cubic feet, which is 16.2% below last year’s high level and 2.6% below the 5-year average. But prices still fell slightly on the ease in global oil prices.
Its nice that consumers can get at least a day off from record prices, but such days should not mean that we slow our efforts to transition to an efficient sustainable energy future.