Opposing Stats on Oil Demand

Opposing Stats on Oil Demand.

It'll be very interesting to see the effect of 18% oil price hike on the Chinese people are. (Reuters)

We already know that the U.S oil demand is going downwards. (NYT)

Aside from this unprecedented miles curb in America (down 1.8% from the high 6 months ago) there is now a huge push behind producing alternative fuel vehicles.

Chrysler will sell cheaper hybrid SUVs (FP)

Honda started producing zero-emission, hydrogen and electricity vehicles which gives you twice the fuel efficiency of gas-electric hybrid. (Macleans) This isn't some pipetalk - they will be available for lease starting in July in southern California and then in Japan.

Looking at the diffusion curve, we can start linking the stages in development by looking at the properties.
It's clear that hydrogen hybrids are in the innovators/early adopters game, as these are leaving the labs and starting to hit the roads.

It's also clear that hybrid cars in general have hit the early majority stage, which is characterized by price-cuts. Once the price passes critical point, the theory is that the technology will start it's mass market penetration. Advantage of Scale follows, lowering the price further.








We already know that the Chinese oil demand has been spiraling upwards. This was one of the major "reasons" given whenever someone asked "why is the price skyrocketing?"

Now, conventional sense tells you that price hike will curb demand. It might cause some temporary demand spike, (Financial Times) but just like in America, in the long run, it will curb demand. However, there are several stories now which worries that the demand may actually spike despite the higher price. Why?

1. Chinese income will grow fast enough to catch up with the price hike.
2. Chinese people mostly use gas for work related reasons, not for leisure.
3. Demand will hike from refineries opening.

The real question is though, is the 18% enough to dampen the demand until new supply comes on?