US Unemployment Rates - November 2008

The November US unemployment figures were released recently. The figures, overall, are continuing to get worse. Here are some of the highlights:

• Overall, the "official" national unemployment rate (U-3) increased by 0.2%, from 6.5% to 6.7%, over October's number. For the past twelve months, the national rate has increased 2.0%.
  
• For the most inclusive unemployment rate measured (U-6), the increase was 0.7%, from 11.8% to 12.5%. For the past twelve months, U-6 has increased by 4.1%.
  
• In terms of monthly change, the state with the largest increase was Oregon (again), with a 0.9% increase; North Carolina had the next largest increase, at 0.8%, and the District of Columbia and Indiana had increases of 0.7% each.
  
• On an annual basis, the state with the largest increase continues to be Rhode Island with an increase of 4.1%. North Carolina has moved into second place, with an increase of 3.2%, and Georgia and Idaho are tied for third with increases of 3.0% each.
  
• The states with the lowest annual increases are Nebraska at 0.4%, Iowa and South Dakota at 0.5%, Wisconsin at 0.8%, and Kansas, New Hampshire and Utah at 0.9%.
  
• The state with the highest unemployment rate is Michigan, which increased 0.3% to 9.6%; Rhode Island, which was tied for the highest rate in October remained at 9.3% to place second. California and South Carolina are tied for third with a rate of 8.4%.
  
• The states with the lowest unemployment rates continue to be Wyoming (3.2%), North Dakota (3.3%), and South Dakota (3.4%). Utah has been joined by Nebraska at 3.7% each.
  
• In terms of non-farm payroll employment (i.e., number of jobs), the states with the biggest decreases since October were Florida (-58,600), North Carolina (-46,000), California (-41,700), Michigan (-36,900) and Georgia (-30,000).
  
• For annual changes in non-farm payroll employment, the states with the biggest decreases are Florida (-206,900), California (-136,000), Michigan (-112,700), and Arizona (-82,200). Two states continue to have statistically significant increases over the past year: Texas (221,200; down 9,200 from October) and Wyoming (8,200; down 1,300).

The PDF version of the Bureau of Labor Statistics press release can be found here.

All Recessions are Not Created Equal

In an announcement that was of little surprise to most of us, the National Bureau of Economic Research (NBER) finally declared that the United States has been in a recession since December 2007. What may not be quite as well known is that not every state is necessarily undergoing an economic recession at any given time. I thought it might be interesting to see which states are doing well despite the recession and which states are suffering the most.

To do my analysis, I downloaded the historical data spreadsheet (Excel file) of the State Coincident Indexes, which is published by the Federal Reserve Bank of Philadelphia. This is a long-running series of indexes that has been published since 1979. What the coincident indexes do is:

...combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average).

Based on this index number, individual state economies can be compared against each other and the nation as a whole to see how well the state is doing. The Philadelphia Fed also create month-by-month color-coded maps so that one can see at a glance each state's performance. Below is the most recent map available, from October 2008. (You can find all of the previously published maps since January 2005 here.)


Looking at the data since December 2007, when the recession officially started, what we find is that fourteen states have actually had economic growth as a percentage change over the past eleven months. Thirty-five states have had a contracting economy while one state (Kansas) has had neither a recession nor growth (a 0.0% "change"). (There is no data for the District of Columbia.) The fourteen states, in order of decreasing economic performance, are: Wyoming, Texas, South Dakota, New Hampshire, North Dakota, Virginia, New York, West Virginia, Colorado, Oklahoma, Louisiana, Nebraska, Massachusetts, and California. What's surprising to me is that California is in this list as they currently have the third highest unemployment rate in the country.

On the other side, the bottom ten states since last December are Delaware (41st), Arizona, South Carolina, Pennsylvania, Rhode Island, Michigan, Idaho, Nevada, Washington, and Oregon (50th). All of these states have had their index drop by at least 2.2% since December and, in the cases of the latter four, by over 4.0%. (Oregon's index has dropped by a whopping 6.1%.)

Of course these index numbers can change significantly from month to month. Both Oregon and Nevada have seen their index numbers drop by double digits within the eleven-month span (and not for the better). However, while things may look gloomy for some individual states, the economy may become better for them within a short period of time while the rest of the country labors under the current recession.

U.S. Unemployment Rates: Where Do We Stand?

The October US unemployment figures were recently released and, with very few exceptions, the numbers are rather dismal. (Highlights can be found here.) The numbers that were released, however, are only the "official" statistics. Meaning, the official unemployment rate that the U.S. Bureau of Labor Statistics gives out in its monthly press release is only one of six unemployment rates that it actually calculates. The "official" unemployment rate is the not-so-imaginatively named "U-3." There are two smaller unemployment rates (U-1 and U-2), and three larger (U-4 through U-6). What I'm concerned about is U-6.

The official definition of U-6 is:

Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

...where...

Marginally attached workers are persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.

Yada yada yada.

In essence, U-6 covers everyone who's either unemployed, whether they receive unemployment benefits or not, or might be working a part-time job but who really want to be working full-time (i.e., they're underemployed).


On to the statistics then. In October, the "official," U-3 unemployment rate was 6.5%. This is the highest unemployment rate we've seen since March 1994. However, the U-6 unemployment rate in October was 11.8%. This is the fourth month in a row that U-6 has been over 10%, with the lowest rate this year having been in February, at 8.9%. The last time U-6 was this high was in January 1994, when it was 11.8%. (Ironically, this is also the very first month U-6 was published.)


As most economists are presuming today, the country is almost certainly in a recession at this time (even though it hasn't been officially announced yet). How do these unemployment rates, then, compare against the last three recessions? U-6, being a rather limited series of data, only covers one time period when unemployment was almost as bad as it is today. In June 2003, U-3 peaked at 6.3%, while U-6 peaked in September, at 10.4%; the largest spread between the two unemployment rates that year was 4.3%.

The next earliest spike in unemployment rates happened in June 1992, when U-3 reached 7.8%. However, there wasn't any U-6 rate at that time, so we can only guess what it might have been. Doing a little spreadsheet analysis, my own guess is that the spread between U-3 and U-6 at the time was about 5.3%; add that to the 7.8% and the hypothetical U-6 unemployment rate may have been about 13.1%. The worst of the three recessions, though, was that of the early 80s. U-3 peaked in November and December 1982 at 10.8%; this is the only time U-3 has ever peaked above 10% since 1948, when the current series of unemployment rate data starts. Assuming that the spread between U-3 and the hypothetical U-6 was still around 5% at that time (and I think it may have actually been larger), total unemployment and underemployment probably would have been around 16% in late 1982.

So. Unemployment is bad now. It's slightly worse than it was six years ago, but it's also not as bad as it was back in the early 90s or the early 80s, which was much, much worse. Consider that your positive thought for the day. ;)

State Coincident Indices Through August 2008

The State Coincident Indices, published by the Federal Reserve Bank of Philadelphia, have been released through the month of August. The top graph is from the month of May, which I've republished to provide some continuity from the previous set of graphs; the latter three graphs are for June, July and August.

As you can see, there has been some strengthening in the Gulf states of Texas and Louisiana (one wonders how the graphs will look after taking into account Hurricanes Gustav and Ike), the western half of the upper Midwest, and West Virginia, which went from deep red to dark blue in a matter of two months. Trouble spots include the Pacific Southwest and the Midwest, although the latter region may be improving; we'll have to wait and see.

From the August 2008 press release [pdf]:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for all 50 states for August 2008. The indexes increased in 12 states for the month, decreased in 31, and were unchanged in the remaining seven (a one-month diffusion index of -38). For the past three months, the indexes have increased in 12 states, decreased in 35, and were unchanged in the other three (a three-month diffusion index of -46). For comparison purposes, the Philadelphia Fed developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index was flat in August and has remained unchanged over the past three months.

State Coincident Indexes

Every month, the Federal Reserve Bank of Philadelphia produces a "State Coincident Index" that allows economists to see how well each of the individual states are doing economically:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

What the graphs below show is a state-by-state analysis of the economy. The first three maps show the month of January for 2005, 2006 and 2007, respectively. (Note that in these maps, a five-point scale is used with dark blue being the best and dark red being the worst.) The last six maps are for the last six months available, December 2007 through May 2008. While the scale has been increased from five points to seven points, the same basic color scheme is still used; i.e., dark blue is the best, dark red is the worst.

As you can see, the American economy has gotten quite bad over the past six months, especially in the Northwest and, to a slightly lesser degree, in the Midwest and South. Some of the states in the Mountain West and Northeast are doing well, with the best state currently being Texas. (I'd be tempted to say that Texas is doing well because of the multiplier effects from higher oil prices, but if that's the case, then why isn't Alaska doing well too?)










HT: Economist's View

Update: How Much Oil Does America Import?

Currently, my most popular blog post by far is How Much Oil Does America Import?, written back in May 2006, two years ago. I thought it was time to update the figures and see how the U.S. is doing since I first wrote that post.

The U.S. gets its oil from two sources: either it pumps its own oil, called "Field Production" by the Department of Energy, or it imports oil from other countries around the world. In 2000, American commercial field production made up 38.69% of the total supply of crude oil, while imports made up 60.28%. In 2005, when I wrote the last post, those same percentages were 33.67% and 65.84%, respectively. (These numbers are different from what I wrote back in 2006 as adjustments have been made to the official statistics; these types of revisions are normal for economic statistics.) In 2007 (the most recent year), the percentages were 33.72% and 66.19%, respectively. While there has been an extremely slight increase in the amount of oil pumped domestically (0.05%), imports have also increased as well. (The reason why both numbers can increase is because a third number, "supply adjustments," fell.)

In 2007, the U.S. imported a total of 3,656,170 thousand barrels. Of those 3.66 billion barrles, the U.S. imported from a total of 46 different countries. The top 5 importing countries were: Canada (18.61%), Saudi Arabia (14.50%), Mexico (14.07%), Venezuela (11.48%), and Nigeria (10.80%), for a total of 69.47% of all American imports. In contrast, imports from countries six through ten (Angola, Iraq, Algeria, Ecuador, and Kuwait) made up only 17.95% of the total; countries 11 through 46 made up the remaining 12.58%.

Looking at petroleum imports in two other ways...

• In 2007, imports from OPEC countries* made up 53.85% of all U.S. imports, compared to the 46.15% from non-OPEC countries. However, this is the exception rather than the rule. Since 1993, when the Energy Information Agency (EIA) started breaking out the statistics, non-OPEC countries have been the dominant exporters ten years out of the past fifteen. The year 2007 was the first time since 2001 that OPEC countries had sold more petroleum to the U.S. than non-OPEC countries.
  
• With respect to the Persian Gulf, those countries** only made up 21.19% of the total imports. This is down slightly, one-half percent, from my 2006 analysis. Note that the U.S. imports no oil from Iran.

Conclusions/Predictions:
Two years ago, I made four points as to how I thought things would go with respect to American oil imports and consumption. We'll look at how good or bad those predictions were:

1. American field production will probably go below 25% of its total annual supply within the next five years.

I think we can write this prediction off; I don't foresee this happening within the next three years (or perhaps even the next ten).

2. In that same time frame, imports will probably be in the high 50s percentage (perhaps 58-59%).

On the other hand, I think this prediction is very much a lock at this time. In fact, I wouldn't be surprised if this number goes back up again, remaining in the 60-65% range.

3. America will continue to seek the majority of its oil from non-OPEC countries, such as Canada and Mexico, if only to avoid being as dependent on OPEC countries as they have been in the past. However, this will probably turn out to be a pipe dream in the long run unless Canadian oil reserve estimates turn out to be near the high end. (Estimates for Canada's proven oil reserves ranges from 4.7 billion barrels (World Oil) to 14.803 billion barrels (BP Statistical Review) to 178.792 billion barrels (Oil & Gas Journal). Obviously, this extremely wide range of guesses shows that no one truly knows how much oil Canada has.)

Since I wrote this, I've gotten a better understanding with respect to Canada's oil reserves. The problem with the Canadian oil sands is that it is made up of a very dense and viscous type of petroleum called bitumen. Bitumen is like molasses at room temperature, and needs heating just to flow. (The tar that we pave roads with is bitumen.) Oil refineries are set up to process certain types of crude oils, and bitumen is normally not one of them. So, while Canada has a lot of proved oil reserves, most of it is not in the form the refineries need to produce products like gasoline. In this respect, the lower reserve amount mentioned above is probably closer to the amount of crude oil Canada actually has. In time, more refineries may convert to take advantage of the Canadian oil sands, but that will probably be a gradual process.

4. Persian Gulf oil, which has ranged between 19.81% and 28.56% of all U.S. imports since 1996, will probably continue to hover in the high teens-low 20s, despite President Bush's goal to cut American consumption of Middle Eastern oil by 75% by 2025, per the latest State of the Union address.

I don't see this forecast changing at all. What President Bush said in 2006 about cutting the amount of Middle Eastern oil America consumes was complete and utter bullshit (and shame on you if you believed him). BTW, shame on you again if you believe either McCain or Cheney that drilling for oil offshore or up in Alaska will make a significant difference. Two reasons: "drop in the bucket" and "long-term projects," neither of which will lower your gas prices. I may post on this in the near future, insha'allah, but in the meantime I recommend that you read John McCain's Oil Scam over at Informed Comment (Juan Cole), and Drilling Our Way to... by Menzie Chinn over at Econbrowser.


References:
US Crude Oil Supply and Disposition (DoE)
US Crude Oil Imports by Country of Origin (DoE)

Notes:
* OPEC countries include Algeria, Angola, Ecuador, Indonesia, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the UAE, and Venezuela.
** Persian Gulf countries include Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates. However, Iran and Qatar export no oil to the U.S.

Cross-posted at Dunner's and Daily Kos.

James Hamilton: Oil Price Fundamentals

James Hamilton at Econbrowser looks at the question of what's been driving oil prices higher, market fundamentals or speculation? I've got some additional comments down below.

The developed economies consume a disproportionate share of the world's energy, with North America and Europe accounting for about half of the total oil use in 2006. However, it is the newly industrialized countries and oil producers that account for the recent rapid growth in demand, with Asia and the Middle East accounting for 60% of the increase in petroleum use between 2003 and 2006. North America and Europe contributed only 1/5 of the growth.

Particularly dramatic in this growth has been China, whose petroleum consumption between 1990 and 2006 increased at a 7.2% annual compound rate. It's always amusing to project these impressive exponential growth rates. If that rate of growth were to continue, China would be using 20 million barrels a day by 2020, about as much as the U.S. is today. By 2030, China would be up to 40 mb/d, twice the current U.S. consumption.

Are such projections plausible from the point of view of potential demand? During 2006, China used about 2 barrels of oil per person. For comparison, Mexico used 6.6-- Chinese oil consumption could triple and they'd still be using less per person than Mexico is today. The U.S. used almost 25 barrels per person. According to the data collected for a new research paper by Max Auffhammer and Richard Carson, there were 3.3 passenger vehicles per 100 Chinese residents in 2006, compared with 77 in the United States. Yes, I would say that these astonishing numbers for potential future Chinese oil demand are not at all inconceivable.

...

I do think there are prospects for a significant boost to world petroleum production this year, thanks to a number of big new projects scheduled to begin production. The Wikipedia database reports 7 mb/d in eventual gross new production capacity eventually expected from projects that are supposed to begin producing during the current calendar year. Before you get too excited about that number, however, several cautions are in order. First, 7 mb/d refers to the eventual peak production, not the amount that can be produced this year. Second, there is inevitably some slippage and delays. For example, the list includes 250,000 b/d from Thunder Horse, BP's Gulf of Mexico project that was initially hoped to start giving us oil in 2005, but is still undergoing repair work. Third, the above tabulation refers to gross new capacity, much of which is needed to replace declining production currently being observed in the world's mature producing fields. At any point in time, some of the world's producing fields are well into decline, some are at plateau production, and others are on the way up. It is not clear what average decline rate is appropriate to apply to aggregate global production, but a plausible ballpark number might be 4%. That would mean that in the absence of new projects, global production would decline by 3.4 mb/d each year. To put it another way, a new producing area equivalent to current annual production from Iran (OPEC's second biggest producer) needs to be brought on line every year just to keep global production from falling. Of the 7mb/d in gross new capacity from the projects tabulated above, projects in Saudi Arabia, Russia, and Mexico account for about a third of this gross increase. Data currently available for the first two months of 2008 show actual production in Saudi Arabia down 350,000 b/d from its average 2005 value, though the latest news suggests that Saudi production may be close to returning to 2005 levels. Mexican production is currently down 400,000 b/d from 2005, and Russian production is down 100,000 b/d from its average level in the second half of 2007.

To summarize, I think we will see some net production gains this year, and expect this to bring some relief for oil prices. But I cannot imagine that the projected path for China above will ever become a reality. Oil prices have to rise to whatever value it takes to prevent that from happening.

So yes, I do believe that speculation has played a role in the oil price increases, particularly what we've observed the last few months. But it's a big mistake to conclude that speculation is the most important part of the longer run trend we've been seeing.

I've been studying petroleum consumption for a number of months now, and have done my own forecast for China through the year 2012 (a five-year forecast). Although I haven't had the chance to post the executive summary of my Northeast Asia forecast here, China's petroleum consumption rate on a per-capita basis is very, very small. Hamilton said that China "used about 2 barrels of oil per person" in 2006, but the actual number is 1.0256 barrels per person. Likewise, petroleum consumption on a per capita basis has been very weak as well. The Chinese compound annual growth rate between 1985 and 2006 was 1.86% per year. I'm forecasting a per capita growth rate of 0.61% to 0.88% for the period between 2006 and 2012. Of course, aggregate consumption growth rates should be somewhat higher but, at current consumption growth rates, it will take decades for China to reach Mexico's consumption level, let alone the U.S.'s level. (To be honest, I don't think that China will ever get that far; I suspect most oil worldwide would be gone before China could get up to the U.S.'s level of gluttony.)

Overall, though, I agree with Hamilton's analysis; I think oil prices are primarily driven by market fundamentals. There probably is some speculation at work here (as there is for commodity prices), but I think a relatively stable level of supply and an ever increasing level of demand are the primary factors bringing oil prices higher.

Answering George on Low Birth Rates in the West

George Carty has (once again) asked an interesting question, this time in response to my Straight Talk About Islam post:

About the birth rates thing - do you think that environmentalist propaganda about "overpopulation" has anything to do with low birth rates in the West?

For a number of years, I've argued that declining birth rates more often had to do with increasing standards of living. The higher the standard of living, the lower the birth rate. I had argued that this could be seen as far back as the era of Augustus, with his introduction of laws such as the Lex Papia Poppaea, which penalized the celibate and childless, especially among Rome's patrician class.

Caesar Augustus encouraged marriage and having children. He assessed heavier taxes on unmarried men and women and, by contrast, offered rewards for marriage and child bearing. Since there were more males than females among the nobility, he permitted that anyone who wished (except for senators) to marry freedwomen could do so, and decreed the children of these marriages to be legitimate, (Suetonius). (Source)

And so I did a quick-and-dirty analysis using data from the CIA World Factbook to see just how true this proposal might be. Using GDP per capita on a purchasing power parity (PPP) basis as a proxy to measure the standard of living, I compared that statistic against total fertility rates for a total of 221 countries. A graph of the data points can be seen below:


On the X-axis we have the total fertility rates with a minimum of 1.00 (Hong Kong) and a maximum of 7.34 (Mali). On the Y-axis we have GDP per capita. If my idea is correct we should expect to find the numbers running from the top-left to the bottom-right. We do see this somewhat, although with a lot of data points in the lower left corner (low total fertility rates and low GDP per capita). If my original idea was correct, the correlation coefficient, which measures the strength and direction of two sets of related data, would be close to negative 1, which indicates a perfectly negative relationship between the two data sets (in other words, the higher one set of data is, the lower the other data set is). Here, the correlation coefficient is negative 0.4854. So there is a negative relationship, but of middling strength.

I also remembered seeing some statistics before showing that countries with low life expectancies often had high birth rates. (If you know that you're likely to die at a young age, you're not likely to wait around until your thirties or forties before having kids, like in Western cultures.) So I took the total fertility rates and compared it against the life expectancies at birth, also for 221 countries. The graph can be seen below:


Now here is a more negative relationship that's much more clearly defined. The correlation coefficient confirms this, being at negative 0.7678, which is much stronger than the correlation coefficient for GDP. In other words, the longer people live, the less likely they are to have children. This is perhaps more of a reflection of a country's ability to provide better health care to their citizens: the better a country's health care, the lower the country's population growth rate. However, there are exceptions to this rule as well. For example, some of the countries with higher life expectancies and total fertility rates tend to be Muslim countries, like Oman (73.91 years; 5.62 babies/woman) and the Gaza Strip (72.34 years; 5.51 babies/woman). Likewise, there are some countries who have both low birth rates and low life expectancies. But, overall, life expectancy seems to be a better explanation why Western cultures have lower birth rates, at least in comparison to standard of living. (There are a couple of other analyses that could be done as well; e.g., life expectancy of men vs. women, and multiple regression analysis of GDP per capita and life expectancy vs. total fertility rates, but I'll save those for the future, insha'allah.)

And, obviously, to answer George's original question, no, I don't think overpopulation has much to do with Western birth rates, although that could be an analysis for another day.

Rice Inflation: When Did It Start?

The global food crisis has been getting a lot of well deserved press recently, and while several different crops have experienced varying levels of inflation, I thought I'd look at rice in particular. Although rice isn't a staple crop in America the way wheat and corn are, it's very much a staple crop here in Asia. Asian reactions to the price increases for rice have varied dramatically. Singapore, for example, has tried to reassure the public that there is plenty of rice while keeping price controls off and allowing companies to bring in additional supplies above and beyond what's normally imported to hedge against any future supply shocks. On the other hand, some other countries in this region (e.g., Vietnam, India and China) have temporarily banned the export of rice.

For this analysis, I used the price data for milled rice provided by the U.S. Department of Agriculture's Economic Research Service. This particular file has price information on a monthly basis since August 2005 for several types of rice in the United States, Thailand (the world's largest exporter of rice), and Vietnam (the second largest rice exporter). For my analysis, I've chosen two American varieties, Southern long-grain milled (LGM) and California medium-grained milled (MGM), and one Thai variety, 100% Grade B. (I've done some analysis on the Vietnamese data; however, the data set is incomplete so I'm not as trusting on that information as I am for the other three sets.)

As you can see on the above chart, rice prices had been relatively stable since August 2005, especially for Thai rice. The current upswings in prices began last summer, in July 2007 for both the Southern and California rices, and in September 2007 for the Thai rice. (For Vietnam, it appears that the upswing began in May 2007; however, there is three months' worth of data missing for October-December 2007, and it's conceivable that prices could have dropped in that time period.) Since that time, prices have risen at a compound monthly growth rate of 7.65% for the Southern LGM, 2.80% for the California MGM, 14.47% for the Thai rice, and 8.32% for the Vietnamese rice. Moreover, as the graph currently shows, there's no indication on the part of any of the varieties that prices are likely to change direction soon.

From my perspective, the inflation for rice is mostly of the cost-push variety, with oil and fertilizer costs as primary culprits. The discussion of the inflation being driven by demand-pull is nonsense, in my opinion. Demographic changes are far too slow to account for such a rapid increase inside of one year's time, and there's not been any sudden desire for people to eat more rice or that rice has become a substitute in place of another grain.

When might we expect to see rice prices declining? Based on current futures prices for rough rice at the Chicago Board of Trade, the May 2008 futures are selling at a price of $23.80 (as of this time). Futures peak with the July 2008 contracts ($24.18), before falling slightly to this year's low of $21.78 (November 2008). For 2009, prices are expected to increase slightly ($22.38 in May 2009), before falling to a low of $18.25 for November's contracts. In other words, prices are expected to drop by almost a quarter, but only in another year and a half's time.

Southeast Asian Petroleum Consumption Forecasts, 2007-2012

The following is an executive summary of a report detailing the forecasted petroleum consumption of Southeast Asian nations for the years 2007-2012. To purchase the full report (US$20), please e-mail me at jjtmdunne@gmail.com.


On a per-capita basis, Southeast Asian consumption of petroleum is expected to rise from the 2006 total of 2.7153 barrels per person to between 3.0979 barrels to 3.1109 barrels per person in the year 2012. In terms of the number of barrels of petroleum for the region, this comes to 1.8656 billion barrels to 1.9132 billion barrels, or 5.097 million barrels to 5.227 million barrels per day (b/d).


Most of the countries examined have tight to very tight correlations between their petroleum consumption and their GDP, meaning, the more petroleum the country consumes, the higher their GDP rises. Of the eight countries where such analyses can be made, five have correlations greater than 0.94 (where 1.0 indicates a perfect, positive correlation). However, Cambodia has shown a long-term negative correlation since 1984, where that country’s GDP has increased while its petroleum consumption has decreased, and the Philippines have shown a negative correlation since 1998.