A few weeks back we highlighted the strong link between GDP growth and oil consumption by showing you how oil consumption per capita has risen in selected countries as per capita incomes rise (Read: The Strong Link Between GDP and Oil Consumption).

Specifically, we noted the potential for China’s oil consumption—already the second-largest oil consumer in the world—to catch up on a per capita basis with other Asian countries such as Taiwan and South Korea.

That’s where we think China’s oil consumption is headed, but this chart from Carnegie shows how strong oil consumption per capita growth has been over the past 50 years. Back in the days of Chairman Mao, China’s oil consumption per capita was roughly 0.2 barrels per year (b/y). When Deng Xiaoping took over in 1982, that figure had grown to roughly 0.6 b/y.

Since then, there’s been no looking back. China’s oil consumption per capita has increased over 350 percent since the early 1980s to an estimated 2.7 b/y in 2011. In fact, consumption per capita has risen nearly 100 percent in just the past decade.

Oil consumption per capita in the U.S. currently ranks among the top industrialized nations in the world at 25 b/y. However, today’s consumption levels are approximately 20 percent lower than they were in 1979.

China isn’t the only emerging country to show big increases in per capita consumption; in fact, the growth in consumption for several other countries far outpaces China. You can see from this next chart from Carnegie that consumption per capita in Malaysia has nearly quadrupled since the mid-1960s. Consumption in Thailand and Brazil has more than doubled to roughly 5.7 b/y and 4.8 b/y, respectively.

Meanwhile, many developed countries—especially those in Western Europe, have experienced substantial declines.

Today’s per capita consumption in Sweden is roughly 12 b/y, down from 25 b/y in the mid-1970s. That’s one of the largest declines in the developed world over that time but isn’t the only one. France, Japan, Norway and U.K. all use less oil on a per capita basis than they did in the 1970s.

This trend is why we feel emerging countries, especially Asia, are the epicenter of oil demand growth for years to come.

While I was in London earlier this week, I joined CNBC Europe’s Commodities Corner to discuss an earlier post regarding my Three Reasons to Believe in $100 Oil.

Of the three reasons I gave, most striking to this group was my belief that higher oil prices will continue because of a weakness in the dollar. What I explained during the discussion was that a falling dollar causes short-term volatility. As the demand for a particular type of commodity increases and the dollar weakens, or vice versa, investors need to deal with an exaggerated movement in the price of commodities. However, I stressed the short-term nature of these events.

More importantly to the long-term investor, I asserted there should be two main focuses over the next 10 years. One is the supply and demand factors driven by infrastructure needs, not only from China, but also many other emerging markets.

For example, investors should compare the economic situation of the E7 – Brazil, China, India, Indonesia, Mexico, Pakistan and Russia – which are the most populated countries against the G7 which are Canada, France, Germany, Italy, Japan, the U.S. and the U.K. While the money supply growth rate of the G7 countries is less than 4 percent, the rate of the E7 group is at 18 percent. To me this means, over the next five years, asset prices should double.

The second important long-term focus is on government policies for infrastructure spending. One noteworthy example I like to use is the expanding infrastructure projects including high-speed rail in China to connect 250 cities and 700 million people. This is a significant driver for commodity prices.

Watch Frank on CNBC

The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. M2 Money Supply is a broad measure of money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market funds.

The following security mentioned in the article was held by one or more of U.S. Global Investors family of funds as of March 31, 2011: Kinross Gold.

The Peruvian stock market has had a very strong reaction to the recent outcome of the country’s presidential election. With Keiko Fujimori’s surprise loss to Ollanta Humala, many Peruvian stocks saw share prices sink before quickly recovering the following day.

Grana y Montero, a large engineering company in Lima, saw its stock endure incredible volatility, reaching a three-month high shortly before the election, and then plummeting nearly 20 percent following election results.

The election has been a topic of discussion among our investment team, as we digest the outcome and discuss the implications a shift in Peru’s government policies would have on the country’s economy and largest industries.

(Read a previous summary of our discussion in “Pivotal Peru Election” here.)

Most of our conversations have focused on the possible ramifications for Peru’s mining industry, as it is vital to supplying the world with many important metals. The country is the world’s largest producer of silver, second-largest producer of copper and zinc, and sixth-largest producer of gold.

We’ve also been impressed with Peru’s recent economic success. The country’s GDP was 8.6 percent in 2010, outpacing Latin American countries including Chile (5.8 percent), Colombia (4.9 percent) and Mexico (4.5 percent). Due to heavy investments in the mining sector and emerging consumer demand, Peru should see its GDP hit 7 percent this year, one of the highest expected in the region.

The problem is most people don’t know where Humala’s intentions lie and opinions vary whether you live in the country or reside in the U.S. According to Bloomberg, investors are worried that Humala “could reverse policies the government expects will attract $50 billion of mostly mining investment and fuel average annual economic growth of 6 percent over the next three years.”

Our global strategist, Jacek Dzierwa, is optimistic for the long-term. He would be surprised to see Humala discard all of Peru’s recent successes and thinks the new president will seek to be more like Brazil’s Lula than Venezuela’s Chavez. But until the country’s finance minister and the head of central bank are named, this Jekyll or Hyde debate will continue to have its effect on markets, particularly mining stocks. As long-term investors, we’re mindful of the volatility but believe it’s not prudent to trade on this news without additional clarity from Peru’s new leader.

The following securities mentioned above were held by one or more of U.S. Global Investors Fund as of 3/31/11: Grana y Montero