While Americans wince as they fill up their SUVs with $2-a-gallon gasoline, market forces are smiling on the Saudi Arabias and Exxon Mobils of the world.
A transfer of wealth of historic proportions is taking place as worldwide spending on oil is expected to grow this year by about $295 billion, or 27 percent, compared with 2003, according to government data.
Consumers and businesses are paying substantially more for gasoline, heating oil, diesel and other products derived from crude as demand and prices surge.
While the corresponding windfall of profits for oil exporting nations and petroleum companies is sapping strength from the international economic recovery, it’s not causing the kind of financial shock that followed the oil crises of the 1970s.
Rising oil costs are linked as much to America’s apparent drive-at-any-price car culture and China’s raging industrial expansion, as they are to the world’s unusually thin supply cushion, a condition that has magnified anxieties about potential supply disruptions in Venezuela, Russia and Nigeria.
With oil futures marching to the $55 a barrel level this month – up from about $30 a year ago – the list of winners is topped by Saudi Arabia, Russia, Norway, Iran, Venezuela and other leading exporting nations. Saudi Arabia alone supplies about 12 percent of the world’s daily oil fix.
Exxon Mobil Corp., Royal Dutch/Shell Group and the rest of the private petroleum giants are also flush with cash as profits and stock prices soar. The same goes for oilfield services firms such as Schlumberger Ltd. and Baker Hughes Inc., as well as the countless smaller providers of the equipment, ships and workers needed to produce and transport some 82 million barrels a day.
The extra $295 billion spent on oil this year comes courtesy of, but not without complaint from, motorists, homeowners, manufacturers, airlines and truckers. The biggest share would come from (no shocker here) Americans, who account for nearly one quarter of global daily oil demand.
United States consumers are expected to shell out an additional $40 billion this year just to heat their homes and fuel their cars and trucks.
European economies are generally worse off, with the prospects for rising inflation and unemployment in the region somewhat higher, according to a report by the International Energy Agency and the International Monetary Fund.
To keep consumption in check, European nations levy significantly higher fuel taxes than the United States, which helps to explain why the total imports of Germany, France, Italy and Spain are about a third smaller than America’s.
In Asia, the picture is somewhat mixed.
In China, where daily oil imports have risen an estimated 35 percent, or about 700,000 barrels a day, and have helped propel global demand and prices to unexpectedly high levels, the rising cost of fuel is merely contributing to a minor slowdown of the country’s economic boom. Put another way, mammoth industrial growth is dwarfing any negative impact caused by higher energy prices.
In Japan, the country’s near-total dependence on imports is offset significantly by the economy’s relatively high fuel efficiency.
East Asian countries are likely to be hit harder, according to the Asian Development Bank, which recently predicted the region’s growth would decline by 0.8 percent in 2005.
To limit fuel consumption the Philippines has banned unofficial use of government vehicles, Thailand has ordered gas stations to close early and South Korea has cut back field maneuvers for its 650,000 troops.
The countries and companies responsible for quenching this ever-increasing oil thirst are raking in the dough.
Based on Energy Department estimates, the value of Russian exports will rise by about $28 billion in 2004, while the value of Norwegian exports is on track to grow by $10 billion.
The Organization of the Petroleum Exporting Countries alone is expected to see its oil export revenues rise by $115 billion, or 47 percent, in 2004, according to Cambridge Energy Research Associates.
Associated Press
A worker at Gujarat State Petroleum Corporation checks the oil flow of a well during its inauguration at Ingoli village, about 25 miles southwest of Ahmadabad, India in September. High oil prices and strong demand have created a worldwide transfer of wealth this year.
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