India’s Nano Means Higher Oil Prices

When 1 billion people are suddenly able to afford a car, you know there have to be some ramifications. While much of the media is fixated on global warming and other environmental pollution issues, the more imminent result—one that will change the way of life in America forever—is the coming surge in oil demand.

Recently introduced by Tata, India’s corporate conglomerate, the Nano costs just $2,500, which means that a huge proportion of middle-class Indians, many who up until now could only afford motorbikes with wife and kids stacked on the back, will be able to own a car for the first time.

Analysts predict the 33-horsepower Nano, with top speeds of 105 km/h and room for five, will be flying off dealer lots.

“The introduction of the Nano is one of the classic steps in the traditional pattern of economic development,” says broadcast journalist Deirdre McMurdy. “As countries like India and China continue to post strong economic growth, individuals begin to prosper and the demand for consumer goods—like cars—begins to take shape.”

In the United States, there are approximately 765 motor vehicles per 1,000 people. Japan boasts 543 motor vehicles per 1,000 people. India has a comparatively tiny 12 per 1,000 people.

If India were to equal the number of vehicles that America has on a per capita basis, it would add approximately 750 million more vehicles to the global vehicle pool. That’s one big pile of steel, rubber, and plastic, and an equally massive amount of new fuel demand.

Global oil production is currently struggling to keep up with global demand, and that’s with oil that traded at $100 per barrel not long ago

Where is all the extra oil going to come from?

The global competition for resources is continuing to heat up.

The major events of history have often been driven by the quest for natural resources. Spain approved Christopher Columbus’s mission to the Americas because of the many goods available in the West Indies that could not be found in Western Europe. The Middle East has frequently held the world’s attention because it possesses vast amounts of oil. In World War ii, the Axis powers’ invasions were often motivated by the hunt for resources, both natural and economic.

In fact, many of the wars throughout time have been sparked by the quest for resources abroad not available at home.

Is the Nano a harbinger of a future resource war?

For more information on what nations will rule victorious in the coming war over resources, read “The Battle Ground,” “Stoking the Engines of Empires,” and “Dependence on Foreign Resources Threatens U.S.”