What is going on with these roller coaster fuel prices? Doesn’t anyone care that fuel management is difficult enough without all of these crazy swings when doing your fuel planning. The fuel experts (not fuel management experts) say growing world oil use will likely outpace the rate of new supplies in 2010, eroding the huge stockpiles of crude which have mounted around the world since the start of the global economic crisis.
According to a Reuters poll of ten top oil-tracking analysts and organizations, oil demand is predicted to rise by 1.3 million barrels per day (bpd) next year to 85.9 million bpd.
If OPEC members can maintain current adherence levels to present output quotas, with group output including Iraq assessed around 28.9 million bpd, crude oil inventories could fall by almost 150 million barrels next year. The real truth of the story is that it is very rare to have 3 people agree on one topic. How difficult do you think it is for 12 OPEC countries agreeing on fuel production. They have all different needs so for them a little cheating on how much fleet fuel they produce is not a big deal to them but it is to these numbers.
The oil demand for OPEC’s crude is seen at 29.3 million bpd. At the end of September, the International Energy Agency assessed oil stocks in the Organization for Economic Co-operation and Development (OECD) at 60 days of forward cover, 120 million barrels above the five-year average.
There are many doubts surrounding the eventual strength of the economic recovery and how oil demand will respond.
These fuel experts, the kind of companies that get paid huge dollars to tell companies where to put their money all have their view of how easy your fuel management will be in the coming years.
• Investment banks Goldman Sachs and BofA-Merrill Lynch have the most bullish outlook for oil demand, projecting 86.4 million bpd and 86.7 million bpd respectively.
• Barclays Capital sees demand at 1 million barrels below Goldman’s estimate because of increased conservation efforts, but conversely sees non-OPEC supplies 1.1 million barrels lower than its U.S. rival due to falling investment during the crisis.
• Deutsche Bank sees demand as relatively weak in 2010, at just 86 million bpd, despite forecasting the world economy will grow at 3.7 percent in 2010 – well above the International Monetary Fund’s forecast of 3.1 percent global growth
Where is all of this demand going to come from? We believe there are a few factors that will cause increase fuel demand, to what level that is the million dollar question. The U.S. return to using a lot of gas and diesel fuel we believe will happen toward the second half of the year. What fuel management facts do we have to back this up, gut feeling. The economy is starting to show signs of turning around. As the economy moves, more fleet management will need to take place because more trucks will be on the roads, this will increase the diesel demand. Americans love their cars and though we might have been driving them a little less over the past couple of years, with fuel pricing at a reasonable level and an economy on the uptick, we will be driving our cars and using gas and diesel fuel just like we have in the past.
Demand growth is expected to be strongest in countries outside the OECD, with China leading the way. With 1.5 billion people, you almost have to think, how can’t they lead the way in just about anything.
Growth in China next year should be significant and the U.S. will be growing. No country in the world likes to use energy like we do here in the USA.
The Chinese economy is expected to grow by around 8 percent in 2009 and may post even stronger growth next year. Implied Chinese oil demand in October was up more than 10 percent year-on-year, customs data showed on Monday
Inside the OECD, the United States is seen posting a small recovery in demand. But many analysts remain doubtful about the strength of growth with some arguing oil use may never revisit highs of earlier this decade in North America and Europe.
“We’re not going to be in an environment when prices will shoot back to anything like $120 a barrel in 2010,” Jacazio at Barclays Capital said. I put that comment in because I would never bet against fleet fuel and the worlds crazy supply and demand issues. If it’s not one thing it’s something else that make oil prices go up or down. It’s like being at a Six Flags over Fuel Management. You have the scary rides and then you have the big beast of a ride, “Fuel Planning” super doper looper. This is the ride that make fuel consultants sick just thinking about what crazy things like Carbon Footprints, bio fuels, changes in fleet fuel cards, fuel inventory management regulations; oh my. Throw in a few clients that don’t understand what a fuel consulting company does and how fuel management can save them money, next thing you know you can be on a free fall in your fuel planning. Good luck.
Gain instant access to the ebook!