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Unseasonable spike

Money | Asian demand is keeping gasoline prices unusually high this winter

Issue: "Realities: 2011-2020," Jan. 15, 2011

U.S. gasoline prices, which usually fall on slumping demand during the fall and winter months, rose sharply toward year end. One reason: record demand worldwide. A report from Scotland-based energy consultants Wood Mackenzie noted that world oil demand for 2010 was "almost certain to exceed the previous all time high reached in 2007." Most of the 2010 surge in demand came from Asia. In related news, the China Association of Automobile Manufacturers estimated that Chinese consumers bought 18 million cars in 2010-a 32 percent jump from the previous year.

Despite rising oil demand, representatives of the 12-nation Organization of Petroleum Exporting Countries, meeting in Ecuador, opted to leave pro­duction quotas unchanged. OPEC, responsible for 35 percent to 40 percent of global oil production, hasn't changed output quotas since late 2008, when it cut production in the face of slumping demand. The OPEC member nations are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela.

An economy on stimulants

With passage of a White House/Congress deal on taxes and spending in sight last month, big investment firms raised their forecasts for U.S. economic growth in 2011. Pacific Investment Management Co. (PIMCO), which runs the world's largest bond fund, upped its growth estimate to a range of 3.0-3.5 percent (by the end of 2011) from an earlier estimate for 2.0-2.5 percent. PIMCO CEO Mohamed El-Erian told Bloomberg the revision came in light of the "massive amount" of fiscal and monetary stimulus expected to be pumped into the economy. A Wells Fargo report also predicted "slightly higher GDP growth" in 2011, "led by gains in consumer spending and business investment."

Bank busts

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The number of bank failures in 2010 topped more than 150, the highest since 1992. Most of the failed banks were small, community institutions (with less than $1 billion in assets) that had seen their bottom lines battered by depressed real estate markets and high unemployment. The FDIC, the government's bank-insurance agency, said it was tracking more than 850 "problem institutions" toward the end of the year, but predicted fewer failures in 2011.
Joseph Slife is the assistant editor of

Joseph Slife
Joseph Slife

Joseph is the senior producer of WORLD Radio and the co-host of The World and Everything in It.


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