2009 June 27 Saturday
Oil Consumption Decline Continues

Peak Oil theorist Dave Cohen takes a look at the size of the decrease in oil consumption.

Oil demand strength can be viewed as following from economic conditions. However, due to its tight correlation with GDP, demand also serves as an indicator of those conditions. World oil demand is way down. Japan, where GDP shrank 15.2% in 2009:Q1, consumed 3.97 million barrels-per-day in April, down 1.02 million barrels compared with previous year. For the week ending May 22nd, demand in the United States was 18.292 million barrels-per-day, down 1.447 million barrels (-7.9%) compared with the same week in 2008. That’s almost 2 and a half million barrels-per-day right there, and I’ve only listed 2 countries.

According to Platts, China consumed 6.69 million barrels-per-day in the 2009:Q1, down 4.5% over the previous year. The lone “bright spot” was India, which was up 4.8% averaged over the entire year 2008-2009 ending March 31st (2.65 million barrels-per-day).

Note that the percentage decline for the US is larger than the percentage decline for China. India's consumption is still growing in spite of the world recession. The size of the US consumption decline is a lot bigger than I'd expected. That was a May figure. In June the consumption decline continues.

Fuel consumption fell 5.5 percent to 17.9 million barrels a day last week, the biggest drop since January, the report showed. Daily gasoline demand declined 2.4 percent, to 9.13 million barrels.

Look at these numbers in a larger context. US per capita oil consumption peaked in 2004. The reduction in per capita consumption so far probably takes us about a third of the way back to 1950 level of per capita oil consumption. We'll get back to 1950 eventually. Though some of us will be driving electric cars when we arrive. US total oil consumption peaked in 2007. My guess: due to Peak Oil we will probably never revisit that peak. If James Hamilton is right to argue that the oil price run-up was an economic shock and major cause of our current recession then it looks like the US economy does not have the buying power needed to push up our oil consumption any higher than it reached in 2007.

US peak per capita oil consumption comes before world oil production peaks for a few reasons. Exporters are using oil of their oil internally. Asian demand grows and drives up prices, basically competing American buyers out of the market. Also, US population growth means additional residents and citizens compete with existing ones. So your own oil consumption takes a bigger hit than world production declines would lead you to expect.

Share |      By Randall Parker at 2009 June 27 10:16 PM  Economics Energy


Post a comment
Name (not anon or anonymous):
Email Address:
Remember info?

Web parapundit.com
Go Read More Posts On ParaPundit
Site Traffic Info
The contents of this site are copyright ©