s Energy & Oil Demand New York Energy Forum October, 006 Dermot Gately NYU Dermot.Gately@NYU.edu Vehicle ownership paper (and other papers) available from website: http://www.econ.nyu.edu/dept/courses/gately/index.htm
Take a long-range, historical view of s growing demand for energy and oil Analyze s income elasticity of energy and oil demand. How fast does demand grow relative to income growth? Analyze s growth in vehicle ownership, and make projections to 00 for vehicle ownership and total number of vehicles
Oil (mbd) Oil (mbd) Oil Demand and Real Income since (IEA data) 60 0 0 0 0 10 9 8 7 6 OECD Non-Resid Total Oil Resid 00 00 10 0 0 Real Income (Trillions $) 8 7 6 0.9 1 0.8 0.7 0.6 0. 0. 0. 0. 0.1 0. 0. 0. 0.6 0.7 0.80.9 1 Real Income (Trillions $) Total Oil Non-Resid Resid 00 00 6 7 8
Oil (mbd) Oil (mbd) Oil Demand and Real Income: -00 (BP data) 60 0 0 0 0 10 9 8 7 6 OECD Total Oil Other Lt. Dist. Resid 00 Mid. Dist. 8 7 6 0.9 1 0.8 0.7 0.6 0. 0. 0. 0. Lt. Dist. Total Oil Other Mid. Dist. Resid 00 10 0 0 Real Income (Trillions $) 0.1 0. 0. 0. 0.60.7 0.8 0.91 Real Income (Trillions $) 6 7 8
Energy Demand and Real Income: -00 (BP data) Energy Consumption (mtoe) 6000 000 000 000 000 OECD Primary Energy 1000 Coal 900 800 Nat. Gas 700 10 0 0 Oil Real Income (Trillions $) 00 Energy Consumption (mtoe) 1000 100 10 0. 0. 0. 0.60.7 0.8 0.91 Primary Energy Coal Oil Nat. Gas Real Income (Trillions $) 00 6 7 8
Per-capita Energy Demand and Real Income: -00 (BP data) Energy per capita (toe) OECD Primary Energy 00 Energy per capita (toe) 1 Primary Energy 00 Coal Oil Oil 1 0.9 0.8 0.7 0.6 Nat. Gas Coal 0. 10 0 0 Real Income per capita (Th. $) 0.1 0.01 0. 0. 0. 0.60.7 0.8 0.91 Nat. Gas 6 7 Real Income per capita (Th. $) 8
s income elasticity of oil demand: Its oil demand will grow almost as rapidly as its income. Even with flat demand for Resid, the demand for all other oil products will grow almost as rapidly as income. Next: the growth of vehicle ownership.
Growth in Vehicle Ownership and Per-Capita Income: Germany, Japan, South Korea, USA 1000 Vehicles per 1000 people 1960-00 800 600 00 00 0 Japan 1960 S.Korea USA 1960 Germany 1960 S.Korea 00 00 Japan Germany USA USA 00 Gompertz function 0 10 0 0 per-capita income, 1960-00 (Real $ PPP, thousands)
Growth in Vehicle Ownership and Per-Capita Income: Brazil,, India, South Korea 1000 S.Korea 00 Vehicles per 1000 people 1960-00 100 10 Gompertz function India 00 Brazil 1960 India Brazil 00 Brazil 00 S.Korea 1 196 India 1960 S.Korea 1960 0.1 0 1 10 per-capita income, 1960-00 (Real $ PPP, thousands)
1000 Modeling Vehicle Ownership as a function of Per-Capita Income: An illustrative S-shaped Gompertz function vehicle ownership: vehicles per 1000 people 900 800 700 600 00 00 00 00 100 Vehicle ownership grows slowly at lowest income levels (below $000) about twice as rapidly as income in $000-$10000 range about as fast as income in range of $1000-$18000 quite slowly at highest income levels, as saturation is approached. income elasticity of vehicle ownership 0 1 0 10 0 0 0 0 per-capita income (thousands) 0 0 10 0 0 0 0 per-capita income (thousands)
Vehicle Ownership and Per-Capita Income: 8 countries 1000 900 800 700 600 00 Mexico 00 Spain 00 USA 00 Japan '0 USA 00 Spain 00 Japan 00 Korea 00 00 USA 1960 Brazil 00 00 Korea 00 00 00 Mexico 00 Vehicles per 1000 people: 100 90 historical 80 & projected 70 60 Brazil 00 India 00 0 0 0 0 India 00 Mexico 1960 Japan 1960 Brazil 196 00 Spain 1960 Korea 198 10 6 7 8 9 10 0 0 0 0 60 GDP per-capita: historical & projected
Vehicle Ownership and Per-Capita Income: Projections 00-00 per-capita GDP (thousands, real, PPP) Country 00 00 Average annual growth rate Vehicles per 1000 population 00 00 Average annual growth rate Total Vehicles (millions) 00 00 Average annual growth rate ratio of growth rates: Veh.Own. to per-cap. GDP United States 7.1% 81 89 0.% 1 1.1% 0.08 Germany 8 1.7% 86 70 0.7% 8 7 0.6% 0.8 France 1.0% 76 779 1.1% 0 1.% 0. Great Britain.% 1 68 1.0% 1 1.% 0.7 Japan.0% 99 716 0.6% 76 87 0.% 0.1 Brazil 7 16.9% 11 77.1% 1 8.1% 1. 16.8% 16 69 10.6% 1 90 11.1%.0 Indonesia 7.% 9 166 6.% 6 6 7.% 1.89 India 6.% 17 110 7.0% 17 16 8.1% 1.98 OECD Total 1.% 8 71 0.6% 617 908 1.% 0. Non-OECD Total 9.% 8 169.6% 19 117 6.6% 1.61 Total World 7 1 1.7% 10 1.6% 81 080.% 0.9
History 1960-00 and Projections 00-00: Total Vehicles 00 000 1800 Rest of World Rest of Sample 1600 100 History Projections Brazil India Total Vehicles (millions) 100 1000 800 600 00 Rest of OECD 00 USA 0 1960 1970 1980 1990 000 010 00 00
Gasoline per Vehicle and Vehicle Ownership, -00. As vehicle ownership increases, fuel per vehicle declines. Fuel demand will increase more slowly than # Vehicles. Gasoline per Vehicle -00 (gallons per day) Mexico USA S.Korea Brazil 1 0 Germany India Japan 1 10 100 1000 Vehicles per 1000 people, -00
Projected Ratios of Vehicle Ownership Growth to Per-capita Income Growth, 00-00. Comparison of D-G-S Projections with IEA(00) and OPEC(00) Region D-G-S IEA(00) OPEC(00) OECD 0. 0.7 0.9 Non-OECD 1.61 1.1 0.97.0 1.8 1.8 India 1.98 0.9 Egypt.09 1.1 World 0.9 0.61 0.7
s income elasticity of oil demand. Its oil demand will grow almost as rapidly as its income. Even with flat demand for Resid, the demand for all other oil products will grow about as rapidly as income. s vehicle ownership will grow twice as rapidly as its income for next two decades. By 00 it will have nearly 00 million vehicles -- nearly 0 times as many vehicles as in 00 -- and more vehicles than the USA. But its vehicle ownership of 70 per 1000 people about where South Korea was in 00 will still be only one-third of ultimate saturation levels.