Demand for oil lessens, due to generational shift

Younger Canadians are trending away from automobiles

Crude oil has come under downward pressure recently, as China’s growth forecasts have dampened.

China is the world’s second-largest oil consumer.

Moreover, the slide in the price of oil is not just due to the recent oversupply and the decreased demand related to the events of this week, but equally to a more permanent decrease in demand.

Nobody wants to admit that there is a permanent structural shift that will affect the automobile industry and demand for oil, attributable to a generational paradigm shift that is permanent. Even with cheap oil, many Millennials see car-commuting as a chore that keeps them away from being connected electronically.

It’s an issue of elasticity of demand and substitution. The Millennials have technological replacements we did not have to automobile travel, a generation ago. There is a very strong trend among young people away from automobiles.

Every-time insurance rates increase, the Millennial will increase their incentive for using transit. Every time a Millennial is stuck in traffic wasting time and fuel, they will increase their incentive for transit.

The Millennial generation is more interested in being connected and time-management than their parents’ fascination with the inefficient car culture.

There is much empirical evidence that boomers and the millennial generation, the two largest demographic groups in North America are converging in a time-of-life moment where what they want is walkable, compact, higher density, service-rich, transit-oriented communities and destinations.

This is the reason that they are very unlikely to save the suburban based auto dependent model of urban development. These fundamental shifts need to be incorporated into the macroeconomic (econometric) models forecasting GDP growth, inflation, and tax revenues of Canada and the US. There is a permanent decrease in demand.

We are already seeing the effect on the Canadian dollar, a petro-currency.  Moreover, the Bank of Canada’s latest interest rate reduction shows that with this permanent decline in the demand for oil, their use of the interest rate monetary policy tool will be limited going forward.

Avi Ickovich

Langford

Just Posted

B.C. budget will have ‘very little impact’ on poverty, advocates say

New Child Opportunity Benefit and income assistance increases are too small for a large effect

Students donate 5,265 socks to Our Place

The middle school donation drive provides socks to struggling people

Garry oaks come down on Finnerty Road

Saanich road to be widened for two-way bike lanes, sidewalks

Black Press readers share photos of their favourite critters on #LoveYourPetDay

Greater Victoria is raining cats and dogs…and snails and goats

Greater Victoria Wanted List for the week of Feb. 19

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

70% of Canadians agree with mandatory vaccines for children: poll

The debate for pro and anti vaccinations has heated up after a measles outbreak in Vancouver

Vancouver Island petition to decriminalize all drugs continues to collect signatures

A Courtenay couple is collecting signatures for their petition to decriminalize drugs in Canada

UPDATE: Woman, off-duty cop in critical condition after stabbing outside B.C. elementary school

The officer was interceding in an alleged assault when he and the woman were stabbed

‘A little baloney’ in PM’s claim about solicitor-client privilege on SNC-Lavalin

The Conservatives and NDP want Trudeau to waive that privilege so Wilson-Raybould can offer her side of the story

Proposed edible pot rules are wasteful, would leave products tasteless: critics

When Canada legalized weed last fall, it only allowed fresh or dried bud, oil, plants and seeds

Samsung folding phone is different – but also almost $2,000

But most analysts see a limited market for foldable-screen phones

Most Read