Oil prices are back near $100 a barrel, but it seems that people are being careful when it comes to how much they drive and putting a priority on fuel efficiency. Why aren’t we being rewarded for our good behavior with lower oil prices? N.C. State University economist Mike Walden answers:
Well, I think the simple answer … is that we Americans — the U.S. in total — is losing its power, if you will, over the … oil market. The U.S. consumption or U.S. share of consumption of oil demand has slipped from 25 percent a mere four years ago to 20 percent today.
And, indeed, our oil consumption has been flat for four years, while world consumption of oil has jumped 20 percent. And we’re seeing enormous increases in the use of oil and, of course, distributed gasoline in countries like China, India, Brazil, and even some nations in Africa. They all have a growing appetite for oil and gas.
So, I think the bottom line here … is that the world oil market is being pushed more so by these other countries, not traditionally by the U.S. And so … we can be doing everything right. We can be buying fuel efficient cars, moderating our driving, et cetera, et cetera, with the hopes that, hey, that’s going to put downward pressure on gas prices, and yet we don’t see it happen because of what’s happening in the rest of the world.