Space Industry and Business News  
Chinese hands help push Americans into small, diesel cars: IEA

by Staff Writers
Paris (AFP) June 10, 2008
Subsidised Chinese demand for fuel is a central force behind a major change in the US lifestyle: Americans are at last turning to small diesel cars, the IEA said on Tuesday.

The effect of high oil prices on inflation, consumer spending and growth are evident but complex, the IEA said.

It explained that although oil prices in current and inflation-adjusted terms have reached record levels, the real burden on the global economy is lower than in the 1980s. But the effect on many poor countries is severe.

The global amount spent on oil relative to global economic production "has not yet reached its early 1980s peak" but high prices were stoking inflation, may delay recovery of the US economy and "in some non-OECD countries the cost of imported oil and/or subsidies is becoming unbearable."

But the current energy squeeze was fundamentally different from the oil crises of the 1970s and 1980s because it was driven by a "demand shock" rather than supply factors.

In its monthly assessment of trends in the oil market, the International Energy Agency, an offshoot of the OECD, explored whether high prices might lead to "demand destruction."

The IEA said that this "will depend mostly on whether China and the Middle East, which account for almost three-quarters of global oil demand growth, substantially modify their administered price regimes," a reference to subsidies.

In the area covered by the Organisation for Economic Cooperation and Development "oil demand is already falling."

US oil demand was expected to fall by about 2.5 percent to 20.3 million barrels per day in 2008.

"More interestingly, even if economic conditions were to improve sharply, it is unlikely that US demand -- largely driven by transportation fuels, notably gasoline (petrol) -- would rebound sharply.

"Indeed, the US seems to be entering a 'post-Hummer' period -- the gradual switch away from SUVs and light trucks to smaller, more efficient vehicles, largely prompted by the perception that oil prices will remain high."

In April almost one in five vehicles sold in the United States was a "compact" or "subcompact" from one in eight 10 years ago when demand for sports utility vehicles peaked. In the first four months of this year, sales of SUVs were 25 percent below the figures 12 months earlier.

US oil demand, the traditional driver of oil demand growth in the OECD, was "poised to contract markedly in 2008 as a result of the double squeeze of the slowing economy and higher prices.

"In the short term, discretionary driving is likely to contract further, while the use of public transportation should continue to increase."

In the longer term, "the structure of the vehicle fleet will arguably change gradually in favour of smaller cars."

The trend could be boosted by tighter federal regulations for fuel efficiency and "by the adoption of diesel-fuelled passenger cars, unthinkable in the recent past but now gaining attention."

Short-term growth of demand for oil would come only from countries with strong economic growth and where consumers were protected by subsidies, which meant essentially oil-producing countries, China and some big countries in Latin America.

Oil-exporting countries were unlikely to abandon fuel subsidies in the short term as they could "arguably" afford them.

Other countries "will probably only make token adjustments" because of domestic factors, chief of which was inflation. And each country had special considerations, for example the Olympic Games in China and social tensions in Argentina.

"However, only China has arguably the financial might to sustain subsidies, and could thus be able to delay any price adjustment even if international prices continue to rise," the IEA said.

"A retail price adjustment in China would have to be very large in order to effectively curb domestic, and more generally, Asian oil demand growth.

"Despite all the hype generated by the recent adjustments of administered price regimes in the region, only a large price adjustment in China has the potential to significantly alter the demand picture."

Growth of oil demand in China could even accelerate if an increase in retail prices improved supply.

"The continued fuel shortages that have beset the country since 2007 suggest that pent-up demand remains considerable," the IEA said.

Related Links
Car Technology at SpaceMart.com



Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News


Toyota says to produce hybrids in Australia
Nagoya, Japan (AFP) June 10, 2008
Toyota said Tuesday it will produce hybrid cars in Australia, whose Prime Minister Kevin Rudd is trying to battle spiralling fuel prices and revive the country's ailing auto industry.







  • Ships Face Loss Of Broadband Cover
  • Analysis: Crackdown on domain name crooks
  • Pacific students lagging in computer age: researcher
  • Icahn moves to replace Yahoo board, restart Microsoft talks

  • Khrunichev Purchases Majority Interest in International Launch Services
  • Ariane Skynet 5C And Turksat 3A Launch Delayed To June 12
  • GLAST Blast Off Delayed Until At Least June 11
  • Independent Panel To Investigate Ariane 5 Software Glitch

  • China's new jumbo-jet firm no threat to Airbus, Boeing: state media
  • China unveils new jumbo jet company: report
  • NASA And JAXA To Conduct Joint Research On Sonic Boom Modeling
  • Analysis: Can airplanes go green?

  • Harris To Supply Navy Broadband Satellite Terminals
  • Raytheon To Provide Army With New Wideband Receiver Suites
  • Lockheed Martin Team Delivers Flight Software For Next Missile Warning Satellite
  • Keeping The Military Fully Networked And Online

  • Measuring How Much Information There Is In The World
  • Paralysed man takes a walk in virtual world
  • Study finds best times for radio signals
  • Self-Repairing Aircraft Could Revolutionize Aviation Safety

  • Globalstar AppointS Thomas Colby Chief Operating Officer
  • SES AMERICOM Announces Change In Executive Management
  • Bill Flynn Joins Americom Government Services to Lead Navy Programs
  • NASA names science directorate deputy

  • Aster Images Sichuan Earthquake In China
  • Japanese astronaut says Earth is 'beautiful'
  • EarthCARE Earthcare Satellite Contract Signed
  • Northrop Grumman To Modify CERES Sensor For NPOESS Prep Mission To Improve Climate Data Payload

  • Axway - Blue Vector - Gebhardt Announces Global Track And Trace Alliance
  • RMI Alchemy Media Processor Powers NavMate-4 Software
  • TSI PRISM Awarded Metropolitan Jail Contract
  • New Options For XLi GPS Synchronized Time And Frequency System

  • The content herein, unless otherwise known to be public domain, are Copyright Space.TV Corporation. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement, agreement or approval of any opinions, statements or information provided by Space.TV Corp on any Web page published or hosted by Space.TV Corp. Privacy Statement