The Pokemon Go Craze And Oil Prices
Summary
-Pokemon Go is getting considerable traction.
-Many Pokemon users are driving as part of playing the game.
-Additional demand sources for oil, like Pokemon-related driving, could accelerate the oil price recovery.
Pokemon Go is an "augmented reality" phone app that has gone hyper-viral, having been downloaded by more than 5% of Android phones in the first few days since it launched. The number of Android downloads has doubled over the past day, from 5 million to 10 million. Reportedly, the app is generating millions of dollars a day in in-game revenue for its owners, including Nintendo (OTC: OTCPK:NTDOY). Nintendo's market capitalization has increased by $10 billion in a week.
There are obvious implications for this. Data usage is likely skyrocketing, and could sustain even if Pokemon Go turns out to be a fad. There are other trends that could be sustainable as well, even if Pokemon Go fades and other augmented reality apps take market share.
One of the more interesting implications hasn't yet been discussed by market pundits or mainstream media. There have already been warnings by local regulators like NY State's Department of Transportation, as driving while playing Pokemon Go has surged. On Craigslist, there are listings by drivers in multiple cities, offering rides for $20-30 an hour for players, and there are numerous posts on Twitter (NYSE: TWTR) addressing strategies for using Lyft (Private:LYFT) and Uber (Private:UBER) to maximize the Pokemon Go play experience.
The interesting angle here, both with this app and potentially with other augmented reality apps, is the potential for a material increase in car utilization, which would lead to increased gasoline consumption and oil demand. The U.S. uses 18 million barrels of oil a day, more than 55% of which are for driving. With even a small percentage of Pokemon Go users increasing their driving, even if usage stayed at 10 million Android users and didn't continue to grow exponentially, this could drive increased consumption of oil to the tune of hundreds of thousands of barrels a day.
