Saudi Arabia, the US & China (EIA Data)The cumulative shortfall in Saudi net oil exports, between what the they would have (net) exported at the 2005 rate and what they actually (net) exported was 840 million barrels (mb), from 2006-2008 inclusive, as US oil annual oil prices went from $57 in 2005 to $100 in 2008.On the import side, the US and China are respectively prime examples of the OECD and non-OECD responses to rising oil prices.The cumulative shortfall between what the US would have (net) imported at the 2005 rate and what we actually (net) imported from 2006-2008 inclusive was 687 mb.The cumulative increase between what China would have (net) imported at the 2005 rate and what they actually (net) imported from 2006-2008 inclusive was 839 mb.So, China not only offset our cumulative decline, their increase exceeded our cumulative decline.This pattern is what I expect to see in the future--OECD and non-OECD countries battling it out for a share of declining net oil exports, with OECD countries generally being forced to reduce their consumption. I had been expecting more of a short term decline in US demand, primarily because of large anticipated reductions in government payrolls and government services (initially local & state, with the feds joining in later), but the stimulus spending is apparently postponing that day of reckoning. But I do think that the longer it takes for another downward leg in US consumption to occur, the less impact that it will have on global net demand.Most companies, most governments, and most individuals are essentially basing their economic decisions on what I call the FIM--the Fantasy Island Model. On Fantasy Island, oil fields don't deplete.In my opinion, a more realistic scenario is that oil importers worldwide, in just the past four years, have already burned through 20% to 25% of our post-2005 global cumulative supply of net oil exports.In any case, based on our export models, governments worldwide are doing precisely the wrong thing at precisely the wrong time--by encouraging consumption, when we should be doing everything possible to discourage consumption.
(For those of you outside of the "Peak Oil" debate, Jeffrey Brown is probably the most well known Geologist on the planet with the exception of M. King Hubbard. I encourage you to Google Jeffrey Brown's stuff.)
In other words, the supply of exported Oil making its way onto the world's oceans is falling at 5 - 7% per year, but the fall in imports into the U.S. is declining faster. Given the currency and car fleet growth in Asia this makes a lot of sense.
It also means that the probability of an Oil shock and double dip recession is so high as to be near certainty sometime in the next 3 years. That does not mean Oil could not decline in price prior to that, but I don't see how another Oil shock does not harm the equity and housing markets and rough up the banks.