Is the growth in world demand for oil the main reason?
Demand is one part of what the money market calls “fundamentals”. The other is, of course, supply. In the opinion of the Bush administration, and the majority of the Wall Street establishment in the US, demand is the principal reason why oil prices are going up astronomically. However, this point of view does not correspond to facts. Consider first the oft-mentioned demand from “China and India” which is frequently put forward as the principal reason why oil prices are going up. Subsidies have insulated consumers in India and China from high oil prices until recently [AFP] According to official statistics published by the United States government, China consumed an additional 377,000 barrels of oil per day during 2007. However, during the same time period Germany and Japan together decreased their consumption by 380,000, and hence, the net effect of China’s increased consumption is zero. Even if China doubled its consumption in the first half of 2008, say to stockpile for the Olympics,
