Financial Daily from THE HINDU group of publications
Friday, Nov 19, 2004
A compulsive guzzler
While economists are busy charting the path of oil a year from now, it may be more pertinent to ask who is responsible for the situation. Why, the US, of course.
Not only did it affect supplies from West Asia, it also wanted to tank up its `strategic reserves' with the inevitable consequences on prices.
Americans are also consuming furiously, even borrowing for it. Washington may plead helplessness over the turn of events and claim, for example, that a nation under attack could justifiably seek to destroy potential enemies. Or, that it is not of its making that the dollar has become the reserve currency as nobody prevents a country from keeping its reserves in, say, the euro.
But more than Iraq or the US topping up its strategic reserves, the very culture of Americans is to blame for the oil mess.
For example, Americans are driving bigger vehicles and buying larger homes and more appliances than even 10 years ago. "As a result, US oil use has increased over the decade by nearly 2.7 million barrels a day more oil than is used daily in total in India and Pakistan, which together contribute more than four times as many people as in the US," notes the Worldwatch Institute in its `State of the World 2004'.
If the average Chinese used as much oil as the average American, China would require 90 million barrels per day 11 million barrels more than the daily world production in 2001.
With only 2 per cent of global reserves and 4.5 per cent of world's population, the US remains the world's largest oil consumer.
The average American consumes five times more energy than the average global citizen, 10 times more than the average Chinese and nearly 20 times more than the average Indian.
Today, the world has some 530 million cars and 11 million vehicles are added every year. One fourth of these cars are on American roads. Cars and light trucks (SUVs) consume 40 per cent of the US' oil and contribute as much to climate change as all the economic activity of Japan. "The fuel economy of the US vehicles would be one-third higher than it is today if weight and performance had remained constant since 1981," says the Worldwatch Institute.
West Europeans use public transportation for 10 per cent of all urban trips and Canadians 7 per cent.
In contrast, Americans use public transport for only 2 per cent of urban trips. It is much the same in houses too. Americans consume 2.4 times as much energy at home as those in Western Europe. In the US, average home size grew nearly 38 per cent between 1975 and 2000, to 2,265 sq ft twice the size of typical homes in Europe or Japan, and 26 times the living space of the average person in Africa.
The US offers full tax deduction on home mortgage interest (India too does, but up to Rs 1.5 lakh), which enables people to buy large houses, big homes means more space to light, heat and cool and need for large appliances and more energy demand. Not to speak of the indirect demand for energy with the growing demand for construction material.
Things are unlikely to improve, for as the US President, Mr George Bush, said while opposing the Kyoto Protocol (a 1997 treaty that seeks to reduce carbon dioxide emission): "American life-style is not up for negotiation."
Thereby hangs the oil tale.
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