NEW YORK — Oil demand worldwide hit record levels in 2010 and is expected to increase another 1.4% through 2011. That increase in demand coupled with the volatility within many oil-producing countries is what is fueling the speculation of ever-rising gas prices. Here are the countries to watch for in the news:
Libya produced about 1.5 million barrels a day, about 2% of the world's supplies. Many deemed the initial oil-price increases following news of the turmoil in Libya an overreaction, especially considering that the world’s oil reserves could accommodate any short-term cut in supply. However, the situation in Libya impacts the ability of the Organization of Petroleum Exporting Countries to respond to further supply disruptions. And some are concerned that Libya may represent the tip of the iceberg.
A big concern among oil analysts is that those pro-democracy protests in Libya will be replicated in places like Saudi Arabia. “They supply not only the U.S. from Saudi Arabia but [also] Europe and Asia,” noted Andy Lipow, president of Lipow Oil Associates, during an April 18 interview with Industrial Info Resources. “There is just simply not enough spare capacity in the world should we lose a major exporter like Saudi Arabia.” Analysts have suggested a Libya-like revolution in Saudi Arabia could drive oil prices up by between 20% and 25%.
It’s election season in Nigeria, and historically that means disruptions to that country’s production of 2.2 million barrels of crude oil per day and higher oil prices worldwide. Nigerians will vote for their president, representatives to their national assembly and governors of the country's 36 states through May.
Japan’s loss of nuclear power has driven many Japanese utilities in search of fuel oil and crude oil for power generation. However, that increase in demand hasn’t outweighed the significant downturn in demand across areas most affected by the tsunami earlier this year. The concern with Japan is in the near future —Japan is expected to place a heavier demand on diesel fuel as the country begins rebuilding.
China’s economy is growing at a pace that not even the Chinese had projected — China’s gross domestic product grew 9.7% during first quarter 2011. Consequently, incomes are rising, and with rising incomes come a greater demand on petroleum products.
To read about the effects of rising gas prices on the retail drug industry, check out these stories from our latest issue of Drug Store News: