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Don’t Look Now But It is a Two Headed Monster Needing to Secure Future Oil Supplies – India Overtakes Japan in Demand for Oil and Joins China in a Need For Resources

August 26, 2010 | About:
CanadianValue

CanadianValue

209 followers
I’ve written before about how we need to pay attention to how China is securing oil reserves all over the globe.

http://www.gurufocus.com/news.php?id=104575

China isn’t the only huge country in the midst of a rapid escalation in oil consumption. According to Platts in the second quarter of 2010 India overtook Japan as in terms of energy consumption. India is now consuming over 3.1 million barrels of oil per day which is slightly more than Japan and only a third of China’s 9 million barrels a day.

Now I’m going to show you some numbers that should help the lightbulb go off in every investors brain. Oil demand is going to increase, it is unavoidable. It might not be a straight line, but it is going to go up and up.

Population by country Per Wikipedia

China – 1,339,117,000

India – 1,186,790,000

United States – 310,000,000

Motor Vehicles Per 1,000 People Per Wikipedia

China – 128

India – 12

United States – 765

Daily Oil Consumption Per Country

China – 9 million barrels per day

India – 3.1 million barrels per day

United States – 20.6 million barrels per day

I really don’t think I need to say much more at this point. You have 2.5 billion people in China and India that use in total half as much oil as 300 million people in the United States. That isn’t per capita, that is in total. Small percentage increases in per capita oil consumption in China and India will make huge differences in total global oil consumption.

And what makes this a big problem is that we have very little spare oil producing capacity in the world currently and that current level of production can’t be increased as we are having a difficult enough time just maintaining it as the giant oilfields discovered decades ago produce less and less oil each year.

All it is going to take is for demand to slightly outstrip production capacity to create another oil spike like what we saw in 2008. It seems likely we are headed for a future of frequent oil price spikes followed by oil price induced recessions.

So I’m doing what the Chinese are doing. I’m loading my portfolio with cheap oil reserves while I can.

Here are my favorite ideas:

ATP Oil and Gas (best bet for near term price appreciation)

http://www.gurufocus.com/news.php?id=105495

Petrobank (Extremely cheap with homerun potential)

http://www.gurufocus.com/news.php?id=104988

Sandridge (Clear path to oil production growth)

http://www.gurufocus.com/news.php?id=105087

Petrobakken (Growth, yield and share repurchases)

http://www.gurufocus.com/news.php?id=103978

Stone Energy (Trading at 1X cash flow for no good reason)

http://www.gurufocus.com/news.php?id=104529

Several other articles of interest

http://www.gurufocus.com/news.php?author=CanadianValue



About the author:

CanadianValue
http://valueinvestorcanada.blogspot.com/

Rating: 3.5/5 (4 votes)

Comments

paulwitt
Paulwitt - 3 years ago
Agree about energy. I believe it is a growth and value sector after reading the book "The Global Energy

Handbook" by John Fortun. I looked at his long term trends of energy and it only goes up. And I think it is a disservice to focus on solar (which provides .01% of world energy) and wind (which provides .2%

of world energy). Hopefully we don't ever get in the position of waiting in gas lines like in the 70's.

*My personal idea of health care reform is having cleaner air via natgas and nuclear......


paulwitt
Paulwitt - 3 years ago
I forgot to add that "clean" coal is also important in the energy mix because coal is abundant and is important for jobs.

Disclosure: I own shares of SYMX, a clean coal company. I also own shares in CLNE, WPRT, SYNM,

and DAR,

Please leave your comment:


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