Happy New Year and welcome to 2012.
In January 2011, I referred to Black Swan events. Well, we had a few last year: the Japanese Tsunami, the Arab Spring, Thai floods. Of course there was also the more predictable, and much anticipated, Greek “quasi-default" and Eurozone crisis, the aftermath of which we are all now living with.
Economic recovery was slower than most forecasters expected, as was global growth. Chinese stock markets fell by around 30% as the main driver of the global economy in recent years also saw indications of a slowdown.
In 2011, the US GDP actually grew by 1.8%. While Europe grew too, the forecasts for the US and the Eurozone deviate in 2012. The Eurozone is expected to shrink by 1.5%, while the US is forecast to grow by 1.7% and then accelerate to 2.5% in 2013.
Since the turn of the year, early indicators have been emerging on the positive side. For the US this could, of course, be the four-yearly Presidential cycle. The nation's car manufacturers reported stronger sales - which is also positive for lubes providers - unemployment is ticking down, manufacturing has grown for the past 28 months and level of indebtedness is slowly improving.
Despite the fundamental issues, many commentators expect the Eurozone to muddle through. Provided it does, the world should look more positive by the beginning of 2013.
All of this has to be put in overall context of the movement East. A decade ago, the global economy was $32trn, less than half its current size. Since the start of the global financial crisis in autumn 2008, the world economy has, in fact, grown by 14% reaching $70trn by the end of 2011, even though Europe has seen some shrinkage.
Some of this post-crisis rise is explained by inflation, but the bulk of it comes from strong growth across the emerging world, led by China. The trends we have seen at work will continue and Asia will continue to grow.
The major oil companies will continue to the withdraw from any but their key markets, leaving space for the Regional Oilcos (ROCs) and the National Oil Cos (NOCs) to pick up market share. There are growing opportunities for smaller oil companies to offer levels of customer service that the cost and volume-oriented majors cannot. The internet will become even more dominant in developing service and solutions to improve productivity and cut costs.
Of course, the closure of the Straits of Hormuz or the collapse of the Eurozone would make 2012 another year to remember, but for all the wrong reasons. As now seems to be my familiar mantra: we shall see.
As always, if you would like to find out more about OATS' lubricants database developments, or offer content or comments for the Lubes Resource Centre, please contact us. We would be delighted to hear from you.
Sebastian Crawshaw
Chairman