By OGJ editors
HOUSTON, Apr. 29 -- Severe acute respiratory syndrome (SARS) will reduce Asia's 2003 petroleum product demand growth through less demand for jet fuel and through reduced regional economic growth and petroleum product consumption, an analyst said.
The virus has a two-pronged effect on petroleum product demand, said Jeffrey Brown, a senior associate at FACTS Inc. and a project fellow at the East-West Center, both of Honolulu. His research focuses on downstream oil and natural gas, energy policy, and environmental issues in the Asia-Pacific region.
People are radically altering their travel habits, avoiding public places, such as markets, and also altering their work habits, Brown said in a research note in late April.
"On the whole, we expect that SARS will reduce petroleum product (regional) demand growth by 70,000-100,000 b/d over the course of this year. This implies that regional demand will grow by 367,000-397,000 b/d in 2003," he said.
The disease's virulence has alarmed health officials and panicked Asian residents.
Health officials have warned people to avoid China, Hong Kong, Singapore, and Viet Nam. Officials closed schools and quarantined health workers to stop the spread of the virus.
The SARS virus has reduced airline passenger demand, prompting airlines across Asia to cancel flights. US and European airlines with Asia networks also have seen a substantial drop in passenger demand.
"Air traffic in the region is down by 10-15%, and it is likely that more flights will be canceled. The impact on jet fuel demand will depend on the extent to which the virus spreads and lingers, but currently demand is down by 110,000-140,000 b/d on a year ago. Over the course of 2003, it is likely to be off by at least 30,000-40,000 b/d," Brown said.
Overall, SARS is projected to reduce the region's 2003 GDP growth by up to 1%, which translates into $31-79 billion vanishing from the Asian economy.
"It appears that the damage could be on the higher end of this range as the panic seems to be accelerating in China, the region's giant in terms of economic growth," Brown said.