Who Controls The Oil Market? Not Who You Think…
by the Investment U Research Team
A 2010 Investment U White Paper
The world's largest countries are drastically changing the way they buy and sell oil. And it could affect every person, family, small business and large corporation across the globe…
So far, this historic shift has been vastly under reported. But the transformation is undoubtedly underway and quietly altering the future of energy.
These days, every time a new barrel of oil is discovered, the world uses four existing barrels. And China and India's demand for oil is still in its infancy – around 1.3 barrels per person per year, compared to about 4.4 in the developed world.
When their economies begin using 2.4 barrels per annum per person, they'll need 24 billion barrels of oil a year, which is much more than the current amount consumed worldwide annually.
Rapid economic expansion in the emerging economies led by China and India has led their governments to review their traditional sources of oil and make substantial changes in the way they obtain it.
And they've opted to circumvent the traditional distribution networks of the New York Mercantile Exchange (NYMEX) and even the traditional international oil companies entirely. In fact, they're undermining them and "locking up" supplies by purchasing crude from the oil producing countries directly.
For example, over the past several years, China has gone on a global shopping spree for oil… cutting deals and locking up every source it can.
That includes $40 billion in loans to Brazil, Russia and Venezuela in exchange for future supplies; direct purchase of oil producing companies; and pledges of infrastructure to countries such as Angola and Kazakhstan… all giving China a claim to billions of barrels of future production.
Over the past decade, Chinese oil consumption has doubled to more than 8 million barrels a day. And many believe the next decade could perhaps see an even larger increase, as the country's demand is expected to increase 5% in 2012.
It has even become the world's second biggest importer of oil, relying on outside sources for about 6 million of the 9 million barrels of oil a day it uses.
That stems from not only the country's rapid industrialization, but also its growing middle class and their growing needs.
China's is the world's largest vehicle market, having already surpassed…
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