Tuesday, November 22, 2016

Oil & Commodity Demand Set to Fall Indefinitely

Global oil, commodity, and consumer demand is set to collapse.  Why?  The combined 35 OECD wealthy nations (list HERE) plus China, Russia, and Brazil represent 70% of global oil consumption while they represent about 40% of global population (chart below).  In comparison, Africa and India (combined) make up 8% of oil consumption despite being 33% of global population (& nearly 100% of all present and future net population growth).

The chart below shows the EIA (Energy Information Administration) historic and estimated global oil consumption by OECD vs. China+Russia+Brazil vs. India+Africa vs. RoW. 

From 2015 to 2040, the EIA anticipates global oil consumption to increase by over 27 million barrels a day.  Of that, the OECD to represent 2% of the growth, China+Russia+Brazil 25%, India+Africa 27%, and the RoW 46%.
I'd like to focus (below) on the population with all the income, savings, and access to credit...the combined OECD, China, Russia, Brazil population.  Specifically, the chart below shows global oil consumption growth from 1985 through 2015 (per five year periods) vs. the change in the combined OECD, China, Russia, Brazil 15-64yr/old core population.  The correlation in the growth of oil consumption to the change in global core population has been very strong...however, once core population growth began decelerating in the '05-'10 period, the correlation has broken down.
The chart below is the UN estimate from 2015 through 2040 for population growth vs. the EIA estimate for global oil consumption growth.  There is simply no relation of the below estimations to the previous period?!?
And below, the full series.  The shrinking population with all the income, savings, and access to credit plus driving technological innovation further reducing demand for oil.  But simple minded central bankers have determined that this is a "transitory" issue and that lower interest rates and the resultant higher debt and leverage will get us through?!?
I have previously shown that nearly all present and future population growth will take place in Africa while the rest of the world simply gets older (HERE).  A fast growing poor sub-Saharan African population absent robust global import markets is sadly set to remain poor.

Of course, you could run the same population projections against nearly all commodities or general consumer growth demand and see the central bankers and politicians are building a bridge to nowhere.  Alas, none of this matters so long as "markets" are "coaxed" to new all-time highs and I'm very wrong that any of this matters until I'm (sadly) very right.

And core population growth by region vs. oil consumption growth.

and then this (below)...the population figures aren't estimates as this population is already born and will simply move into the working age population...now, the oil estimates, seemingly pure fiction.
Since '03, China has driven global oil and commodity demand with a moonshot of credit vs. a decelerating core population to build infrastructure and entire cities for a population that is never coming...

Finally, context why a combined India / Africa will never replace the credit supernova that was China (below).