Oil and gas

Demand for oil and gas is very high in emerging markets. In fact china is already the world largest car market. Cars are very popular in India as well. The cars are becoming very affordable to. China and India have cheap car brands like Geely and Tata motors. The cars made by these companies are much cheaper than western cars. A good example is the worlds cheapest car the Tata Nano. Families are lining up to buy it. Tata will surely sell this car to other emerging markets as well.

Many workers are first time car buyers. They are switching their bikes and motors for cars. Especially families want to make this switch. It is not very comfortable to sit on a motorbike with more than two people. The cars are becoming more affordable because the wages in emerging markets are rising.

This extra demand for oil comes above the demand in the western world which is already high. It is very hard for particularly Americans to change their car use. Many still want to drive even if the prices are high.

While the demand is big the supply is limited. Scientist are sure that oil and gas will run out sometime, although they are not in agreement about the timing. The law of supply and demand dictates that oil will get more expensive the rarer it is.

Easy oil is the first oil that will run out. This means the oil will have to come from harder to reach places. With new technology it will be possible to extract oil in new way, examples are deep sea oil and tar sands. But this oil will be very expansive to produce. This means to customer will have to pay a high price for it to.