WHY OIL COSTS MORE: CASE STUDY – INDIA

Why? Because citizens of rapidly emerging nations like India are moving to cities and starting businesses and buying cars and using electronics and living as much like Americans in the movies as they can and that requires oil and that creates demand and demand creates competition for oil in world markets so oil costs more. (5th in the WHY OIL COSTS MORE series: KAZAKHSTAN, SAUDI ARABIA, NIGERIA, VENEZUELA)

India’s July crude oil imports up 11.3 pct y/y
August 23, 2007 (Reuters via Yahoo News India)

WHO
India

Mumbai: The 4-legged Sacred Cow at the center, lots of 4-wheeled Sacred Cows all around, waiting to take over the intersection. (click to enlarge)

WHAT
Crude oil imports were 11.3% higher in July 2007 than the same month 1 year ago. And India is only Asia’s 3rd largest oil consumer.

WHEN
- July 2007 oil imports: 10.63 million tonnes
- July 2006 oil imports: 9.55 million tonnes
- Oil demand is expected to grow 2.9%/year thru 2011/12 to 132 million tonnes/year.

WHERE
Official data released in New Delhi, India’s capital.

WHY
- Domestic oil products sales were up 3.9% for the year, primarily on transport fuels.
Petrol (auto fuel) sales were up 17.9% compared to last July of last year. Diesel (1/3 of Indian consumption) was up 14%.
- Oil exports were also significantly up, though diesel exports were down slightly.
The increases came despite a drop in naphtha demand as Indian petrochemical and fertilizer manufacturers moved toward natural gas as its main feedstock.

The only thing likely to change the picture is Peak Oil. (click to enlarge)

QUOTES
- Unnamed oil ministry official: "Demand from the agriculture sector increased due to marginally higher rainfall compared to the long-term average. Sowing ... has also increased…"
- Unnamed oil ministry official: "About two-third of the exports are from private oil companies. Diesel accounts for 35 percent of the total exports…"