Exercise A.1 : Oil Demand and GDP Relationships
Exercise A.1 : Oil Demand and GDP Relationships

Regression Statistics | Multiple R | 0.973261851 | R Square | 0.947238631 | Adjusted R Square | 0.946414235 | Standard Error | 611.7650139 | Observations | 66 | | | | Coefficients | Standard Error | t Stat | P-value | Intercept | -7.962621221 | 83.69853866 | -0.095134531 | 0.924505216 | GDP Data (USD $M) | 0.001155711 | 3.40948E-05 | 33.89703095 | 1.32639E-42 |

Table 1. Oil Consumption and GDP GDP regression analysis results

Table 1 above shows that 94.7% of the 2010 oil demand of selected countries can be explained by the explanatory variable (2010 GDP growth of those countries). The remaining 5.3% of the oil demand in 2010 is unknown and cannot be explained using the linear regression model Oil demand = 1 + (2*GDP) + Residual.
Additionally, a $ USD 1,155.71 increase in a country’s GDP will lead to a 1,000 barrel per day increase in that country’s oil demand, assuming all other variables are held fixed. Figure 1. Oil consumption by country
The graph above shows the predicted vs. actual oil consumption by country using GDP and oil consumed (‘000 barrel per day) data for 2010.
Based from the above, the U.S. was the top oil consumer in 2010. It consumed 16.7 M barrels per day - exceeding the benchmark result from the regression analysis by 15% or 2.4 M barrels per day. Other countries observed to have exceeded their benchmarked oil consumption are Saudi Arabia, Singapore, Iran, Canada, Korea, Venezuela, Thailand, UAE, Kuwait, Netherlands, Indonesia, Russia, Mexico, Egypt, Malaysia and Brazil.
On the other side of the equation where the actual oil consumption is less than the benchmark, China led the way. In 2010, it could have consumed an additional 2.4 M barrels of oil per day. Other worth noting countries which have