Oil Demand in the Developing World: Lessons from the 1980s Applied to the 1990s*

Abstract

Oil consumption in the developing world increased 37% over the decade of the 1980s. The 1990s promise to be more dynamic yet. In this paper we trace the evolution of these changes in the 1980s for Asia, Africa, Latin America, and the Middle East. Econometric work is used to determine how well growth in income, prices, and population explained growth in the 1980s, comparing forecasted with actual values for 1990. We find that the forecasts are quite good at the global level while consideration of additional facts such as urbanization, vehicle stocks, balance of payments, intetfuel substitution, and industrialization helps explain some of the regional variation. The econometric estimates along with a discussion of other variables are used toforecast consumption to the year 2000. The forecasts suggest that growth in oil product consumption during the 1990s is likely to be at least double that of the 1980s with Asia leading the way.