The drag of present oil prices is evident today in Japan’s trade surplus data for April. Japan’s trade surplus (exports over imports) “tumbled by a worse than expected 46.3% in April due to the rising cost of energy imports and falling exports to the US economy,” the government said Thursday. “Exports to the European Union grew by the slowest pace in more than two years.”

“The data showed that Asia’s largest economy continues to be pressured by a global economic slowdown,” despite “brisk shipments to fast-growing emerging markets.”

The point to be understood here is that Japan’s exports over imports shrank by almost half in April, notwithstanding ongoing strong demand from emerging markets.

Emerging countries are just not nearly as good at consuming as westerners. As a point of reference, US consumers in 2006 consumed 9.7 trillion dollars worth of goods compared to about 1.3 trillion of goods consumed in China and 750 million in India. US consumers are almost 10 to 1 better at buying goods than Chindian consumers. This is why a big contraction in western consumption inevitably brings a big contraction in world GDP.    more »

The following chart lends perspective on who is exerting the greatest demand on global oil supplies.



The source of the data is from BP and Nationmaster. The chart is from the Sudden Debt blog.

I have not yet found a version updated to 2008, but the relative demand of the players has not changed too much in 2 years.

We can see that North America and other developed countries are by far the greatest oil consumers. This is why suggesting that emerging market demand is the problem behind current prices is ludicrous. We westerners, and particularly in North America, have simply been gorging like pigs at a trough. It is actually embarrassing. For us to complain that emerging countries are causing the demand stress is the equivalent of obese people complaining that the malnourished now expect to share in the daily food supply.   more »