tag:blogger.com,1999:blog-3184121284208439755.post5302306962333338515..comments2010-07-04T19:03:02.546-04:00Chris Lawrencehttp://www.blogger.com/profile/07305747866146613339c4nadaguy@gmail.comBlogger1125tag:blogger.com,1999:blog-3184121284208439755.post-40160190776431239272010-07-04T17:19:37.693-04:002010-07-04T17:19:37.693-04:00Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:<br />- China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year<br />- Transition takes 30 years <br />- No peak in global production<br /><br />In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years: <br />- Oil demand elasticity of -0.3 <br />- Current production 84 million BOPD, current price US$ 80<br />- Peak production 100 million BOPD<br />- Post peak decline rate of 3-4%<br /><br />If you want to try the model for yourself using your own assumptions it can be found at: www.petrocapita.com/index.php?option=com_content&amp;view=article&amp;id=128&amp;Itemid=86Anonymousnoreply@blogger.com