Crude Intentions

Whenever retail gasoline prices spike it is big news.  But you don't hear much mention when they start to come back down again.  We are entering driving season and US retail gasoline prices are nearly $0.50 off their highs of last March   1 Year Chart.    Since 2007 World Petroleum consumption is up 1.8MM bpd (2%) while world oil production is up 2.7 MM bpd.    The US, Europe, and Japan are together using 3.6 MM less bpd than they were in 2007.  The big gainer is China who is using 1.4 MM more bpd than in 2007.  Other big gainers are India +0.600 MM bpd and Saudi Arabia +0.800 MM bpd.  Saudi seemed surprising until you realize that they burn crude oil to generate electricity.  Checking todays NYMEX settles, the crude oil forward curve is essentially flat from Feb 2013 through  the end of 2018.  Either the world is predicting a lot of new production coming on line in the next decade, or they see a lot of substitution away from crude, or they are not predicting much growth for next decade.  Btw for all of those predicting that the Fed's stimulus will generate huge inflation - the crude oil market is not seeing it any more than the TIPs market is.