The $100 A Barrel Solution
The high and sustained price of crude oil is having unintended consequences. Global consumption of crude oil rose by 14% between 2000 and 2010, about equal to the increase in population. Almost all of the increase was in Asian countries, especially China and India, and, surprisingly, the Middle East and other oil-exporting countries. The Middle East as a whole increased oil consumption by 56%, led by Saudi Arabia with a 78% increase. Heavily subsidized and inefficiently used, domestic consumption of oil accounts for about one-fourth of Saudi Arabia’s huge oil output, about 2.5 million barrels a day. In contrast, the U.S. and Europe decreased oil consumption by a small amount, less than 1% in the U.S, over the same period. Some of this is due to the recession, but there are longer-term trends that might lead to continued decreases in total oil consumption. It is important to remember that crude oil is an input; peopl...