Saturday, March 17, 2012

Two nice graphs showing world-wide production of crude oil and the demand for crude oil. Helpful if you WANT to understand more about gasoline prices.

Here is a big piece of the gas price puzzle.  This graph shows the annual production of Crude Oil since 2001. Seems to have leveled out since 2005 on the supply-side of the equation. ("mbpd" stands for "Millions of Barrels Per Day")


However, the demand for oil has not been constant since 2005.  The graph below shows the change in demand for barrels of oil per day over time. The if you add the total from the blue line (at "Dec") and the total from the red line (at "Dec") you get world wide demand. You can see it meets and exceeds production from the previous graph.  Note: the difference between the two points represents demand from developing countries like China, Brazil, India, Russia, and various other rapidly developing areas.
Source: Business Insider
The developed world demand is falling and and the developing world is picking up the slack. 

Why is this so hard for people to understand when it comes to gasoline prices?
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