Cars Driving Oil Demand

The federal government expects global energy use to rise by nearly 50 percent in the next quarter-century, with the bulk of that increase due to strong GDP growth and rising household incomes in the developing world.

The Energy Information Administration (EIA) says energy consumption in non-developed countries will be 84 percent higher by 2035. Over the same period, energy use in the developed world will grow by 14 percent.

The EIA says oil will remain the world’s largest energy source, with transportation being the key driver of oil demand. The red line on the chart reflects that auto ownership in the developing world – China is the world’s largest car market – is expected to continue on a steady upward trend.

Energy use for transportation in the developing world is expected to rise 2.6 percent a year through 2035, while in the developed world the growth line is essentially flat (blue line).

This demand increase from the emerging economies may end up having a profound impact on price. The EIA estimates oil prices will average $79 a barrel in 2010, but jump to $108 by 2020 and then $133 in 2035.

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About Frank Holmes 282 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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