Oil Addiction: Europe's the Surprising Leader

Jan.15.10 | About: VanEck Vectors (OIH)
"America is addicted to oil, which is often imported from unstable parts of the world," said George W.Bush while addressing the Congress in 2006. This was a phrase borrowed from the Economist. In the mid-2000s, the environmental concerns with regards to oil consumptions focused on China and the US, whereas limited attention was paid to Western Europe.
In my opinion, this was due to two factors: a) people still think of individual countries like Germany, France, the U.K., etc. rather than one unified economic region; b) huge credibility of Western European countries as environment-friendly powers. Having signed and implemented the Kyoto treaty first, the Western European countries were exempted from environmental criticisms. Rather, the USA and China were perhaps unfairly portrayed as being insensitive and myopic countries which were sacrificing the future of the planet at the expense of their short-term economic gains.
However, the numbers tell a different story. If we take net annual oil imports as a proxy for oil consumption, then the economic power which has most increased its oil consumption between 1995 and 2009 in absolute terms is Western Europe. Concretely, the Western European consumption has increased by 3’849 k barrels more, whereas the American and Chinese consumptions have increased by 2’888 k and 3’541 k barrels respectively.
I draw two important conclusions from this overview: Firstly, when monitoring the oil demand dynamics, more attention to Western European numbers should be given. My impression is that market participants emphasize the US and Chinese dynamics at the expense of Western Europe. Secondly, environmentalists should treat all economic fears fairly and Western Europeans should also get their fair share of the environmental criticisms.

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