Posted in: Gas Prices,
by Gregg Laskoski on May 22, 2013 02:30 PM
The Gross Domestic Product (GDP) in the United States expanded by 2.5 percent in the first quarter of 2013 over the previous quarter. GDP Growth Rate in the United States is reported by the Bureau of Economic Analysis. In a case of apparent cheerleading, when they reported the latest GDP number, the Wall St. Journal said the number was an indication that the U.S. economy ‘perked up’ in the first quarter.
Additionally, WSJ explained that the GDP’s first-quarter 2.5% tick followed growth of “just 0.4% in the fourth quarter” and said “the overall performance suggests the economy continues to expand at around 2% a year on average, as it has throughout the recovery.” ‘Recovery’… yes, that was the word they used.
Strangely, the media's words conceal what numbers reveal...
Hold that thought for a moment while we look at China. Just a month ago Bloomberg reported that China’s energy consumption had stalled “as its economy slows.” (Apparently there was nothing to suggest anything even perking up.) But, remarkably, the numbers tell us something else…
Elaine Leven, president of Powerhouse, a Washington DC-based energy consultant, says “Economic growth in China is still robust and China’s GDP grew by 7.8% in the first half of 2012 (the most recent data available).” She noted that the growth there is slower than in recent years, adding that China’s economy has grown at an average real rate of about 10 percent per year over the past 10 years.
China’s energy consumption reflects the growth. Oil demand has increased from 4 million barrels per day in 2000 to more than 10 million bpd today and climbing… EIA reports that China now represents two-thirds of the world’s oil demand growth. And that’s important for American consumers to understand and recognize that where fuel prices are concerned we are impacted by China as much, if not more so, than we are by OPEC.
So when gasoline consumption wanes in the U.S. amidst reports that robust energy supply outpaces demand and America’s “driving patterns have downshifted” it’s important not to let these pieces of information paint the whole picture for us. Let’s remember that the price at our local pump reflects not only local logistics and taxes but seasonal changes, global crude oil prices and global supply & demand too.
Don’t be fooled by a U.S. economy stuck in ‘neutral’. The growth of China and other emerging nations suggests that global demand could keep consistent pressure on crude oil and U.S. gasoline prices.