## US Oil Consumption Dropped in 2005; Global Consumption Climbed

##### 15 June 2006
 US, China and Japan. Click to enlarge.

According to BP’s just-released Statistical Review of World Energy 2006, consumption of oil in the US dropped 0.16% in 2005 from the year before, declining from an average of 20.732 million barrels per day (mbpd) to 20.655 mbpd.

Global consumption of oil, however, increased 1.3% from 2004 to 2005, climbing from 81.444 mbpd to 82.459 mbpd. US share of global consumption thus dropped from 25.46% to 25.05%.

The 2005 decline is US consumption was the first since 2001, when it dropped 0.27% to 19.649 mbpd from the year before.

China, the second-largest consumer of oil behind the US, saw its consumption climb 2.9% from 6.772 mbpd to 6.988 mbpd. Japan, in third place, also increased its oil consumption 1.4% from 5.286 mbpd to 5.360 mbpd.

 Production in the US. Click to enlarge.

Oil production in the US continued its decline, dropping 5.5% in 2005 to 6.820 mbpd—assisted in that loss by the impact of the hurricanes in the Gulf.

Worldwide, oil production—including crude oil, shale oil, oil sands and natural gas liquids—increased by 1% in 2005 to 81.088 mbpd.

Resources:

Good news, stabilization is the first step. Considering the US economy is growing at ~3.6% annually, this represents significant progress in the right direction. It also proves, at least for this one year, that robust growth is achievable without a corresponding leap in oil consumption.

However, one swallow does not a summer make, nor does this result in and of itself prove a permanent shift in US demand. The long-term trend since ~1980 is a year-on-year increase of ~300,000 barrels.

Considering Katrina, I'm not sure this means much.

Also, a very large proponent of our growth is government spending. Iraq and disasters like Katrina exacerbate this.

We need to decrease fossil fuel consumption by at least 60% if we are going to have a chance of retarding global warming.

It is clear, from books like Natural Capitalism, by Amory Lovins, that we can go a long away towards conservation without cutting into the bone of our economy. Certain businesses, like Dow, have shown that there is money to be made by conservation in improving the bottom line.

Consumers can improve their "bottom line" too by plowing some of their income is to measures that will help them conserve in the long run.

As far as growth goes, it is a flawed measure of welfare. GDP counts everything, all the goods and all the bads. We need to focus on indicators that really reflect people's welfare, not just the gross product pumping through the economy.

We also need to consider that our natural environment provides billions of dollars of services to the economy. A healthy watershed provides billions of dollars of services ensuring that the water is clean for the citizens of New York. Without this watershed, clean water would requires billions of dollars of expenditures.

Car pooling and mass transit (along with the lanes/toll lanes, high density automated garages, pickup locations, police/ surveillance/security presence, etc) may do the trick. A big tax on a gallon of gasoline ($1-3) will be needed to bring down demand as well. The 1-2 punch, theoretically, may cut gasoline consumption by 25-50% during workdays. _ ____As to those who may not be able to afford this, a rebate for more efficient cars (and trucks for those who do use them for designed purpose), replacing the powerplant/transmission of older vehicles with slightly better pep and go, but way better gas mileage. Car makers could also add stoplight engine shutdown (automated and manual) with instantaneous startup. Couple that with cylinder deactivation, lean burn/reduced-variable fuel/air ratio under low/stable loads to reduce fuel usage further; a car-light truck needs 30-120 hp for highway cruise under light conditions, which cars and light trucks spend most of the time under. This may improve fuel efficiency by 5-50% (though improvements as low as 1%, and as high as 100% are possible) for most drivers. I think there a lot of people who want the potential for quick acceleration and speed but won't necessarily be able or want to use that speed and acceleration all the time. Be that as it may, I think Toyota is considering providing user programmable software to put their cars in different power modes depending on their desires/needs at any point in time. This would be especially applicable to hybrids as the electric/ICE mix is largely a function of optimization programming. Most cars out there have more power than I would ever need or want. If the consequent fuel penalties involved with that potential power could be mitigated this would be helpful. Actauly this should be the harbinger od the future. Many forget alot of our consumption of oil comes from production of things we quickly arnt producing anymore. It was calculated that soon no matter what else happened as industries moved to china american consumption of oil would level out and then start to drop rapidly. The number of bussinesses planning to make the leap is staggering. Its comfirmed as I said years ago that ford is planning an all out leap to mexico 150000 jobs worth and of course a massive closing of american plants. Gm we already know now plans massive factory expansion in china and closings here. As they go so too go all the suppliers and support that helped them. Plastics factories glass factories steel mills you name it all going elesewhere in 10 years or less. Wintermane: Good point. We are offshoring our production and therefore demand for oil. That does not bode well for total demand, but may help explain the reason for oil companies not building refineries in the US (other than the lame bashing of environmentalists). Oil companies are businesses, and they can see trends. "A big tax on a gallon of gasoline ($1-3) will be needed to bring down demand as well."
I don't think that's going to solve anything and only penalizes the less affluent. Remember that not everyone can afford a new car, and the majority of people buy used vehicles. so your theory on taxation would only help the people that needed it least. I do believe that companies should focus on products to help older vehicles get better gas mileage such as integrating electric wheel propulsion retrofits. This could help reduce emissions while negating the need to replace all older, less efficient cars. Also, bolt on parts/systems that would lower gas consumtion for these same vehicles. I look everywhere for anything could improve my gas mileage, and can't seem to find anything short of some turbine, air filter replacement, that franckly doesn't convince me. If anybody does know of any, please post these.

wintermane may be right. A service based economy uses a lot less Oil and Energy than a manufacturing economy. Can a large industrial country like USA exist for a long time without a strong manufacturing arm???

We could easily reduce our current Oil/Energy consumption and GHG by 50% with better built houses, drastically more efficient vehicles, appliances, tools, lights, electronics, HVAC and fireplaces, schools, offices, stores, manufactures, farm instruments, trucks, VUS, buses, trains, boats, pleasure crafts, small and large airplanes etc.

The transistion will not happen until the price of Oil and Energy goes up beyond the affordabilty point for most people and industrial-commercial users. A $3+/gal (and$.10+/Kwh) it is a very first step. The effect will be more noticeable at $6+/gal and$.20+/Kwh. A carbon tax could progressively raise the price of fossil fuel while maintaining the price of clean electric energy reasonable. Otherwise, the Oil producing countries and refiners-distributers will do it and continue to get huge revenues for many years to come.

If oil prices continue to climb, it becomes less worthwhile to transfer US factory production overseas because the cost of shipping back to the US continues to climb. Those freight ships that send cars overseas use oil (diesel) for fuel, so if the cost of oil keeps rising, that will limit how much production can be transferred away from the place you intend to sell the product. High oil costs can be good for American businesses by making it hard to get your product shipped halfway around the world cheaply.

Referring to a $1 -$3 increase in gasoline tax...

I don't think that's going to solve anything and only penalizes the less affluent.

So, what would happen if it went up $0.20 per year for the next ten years? If you knew it was going to be going up, you'd know to buy a more fuel efficient car next go-round*. Since it wasn't a huge sticker shock all at once, it'd hurt less because nearly everybody cycles through a car in a 10 year period, meaning that most folks would have their chance at a better auto within five years, before the price went up a full$1.

It's true that consumption taxes hurt those who are less afluent. But, it's also true that government regulation resulting in higher priced cars (like demanding high mpgs) hurts those who are less afluent too.

If you want society to consume less gasoline, raise its price. It's the only way to get the results you want without additional strange behavior. Sure, it hurts in the short run, but a gradual increase in prices eases the pressure and gives people time to make decisions that will soften the blow.

* And by that I mean: a car with higher mpg, a house closer to work, work that allows more telecommuting, finding a friend to carpool, learning how to properly inflate your tires and lose the leadfoot to use less fuel, buying a bike, living in a place with mass transit or demanding that mass transit be expanded to where you live, etc.

Actauly the fact is the china market is more important to ford and gm then the american one. The parent company of wich ford america and gm america are red headed stepchildren has very obviouslybeen planning to cut losses in america and wait till a new generation of buyers AND cars has come. They can always come back in 20-30 years OR buy a stake in chinese car companies and thos sell through them in america.

Stomy -

I agree with your rationale for higher fuel taxes in the US and, the idea of ramping them up slowly but predictably.

However, by itself such a tax would substantially increasethe total tax burden, especially on less aflluent members of society. To compensate, the amount raised should be disbursed by way of flat income tax credits. That gives you a choice: drive a more fuel efficient vehicle or just plain less and you come out ahead. Drive a gas guzzler or a lot of miles and you end up with less cash in your pocket. The ramp-up gives everyone a chance to adapt to the new situation, initially with limited impact on the resale values of existing assets.

I kind of agreed with several people in this blog that maybe a outsourcing effect in US reduces US oil consumption, but in turn, Asia regions will increase oil consumption (in general energy) due to increase of manufacturing activities. (not to mention the benefited service industries in china that also requires lots of energy to sustain).
but giving the rate of outsourcing and the rise of oil price, it may happen at a certain point in the uture that no longer its beneficial to produce in China, but rather the concept of local produce /local consume prevails. That's because the overall equation has a more significant term: "efficiency". We need to use the least amount of energy to perform a certain work.

Hopefully in the future, "saving energy is unamericans" is no longer acceptable in america.

stomv,
I personally have driven my car for 7 years, I bought it used at a fantastic price which otherwise I wouldn't be ablel to afford. Under your theory, I should have already changed my car and supposing there were more options available in used cars that are more efficient, I should now be driving one. However, there aren't. Price of Hybrids is still very high, and a waiting list for new ones is extreamly long. It isn't a coincidence that hybrid sales are slow, it's because there aren't enough of them made to satisfy demand, and not too many are letting them go at affordable prices. Now suppose that I also lost my job, or that I have to drive longer, where do you get off making a generalization that we should just move to a city with mass transit if we aren't already living in one, buy a car with higher mpg, a house closer to work, work that allows more telecommuting, finding a friend to carpool? Do you live in some fairytail? I can't up and leave my family so that I don't have to drive longer to work! Why don't YOU pay for all of us to buy better, more fuel efficient cars! The manufacturers need to be made resposible for offering fuel efficient cars that are reliable. The burden shouldn't be put on the genereal public to pay for higher taxes. I didn't decide to produce more horsepower instead of fuel efficiency on ANY car. I'm not the one resisting making PHV! I'm not the one the claims the 15mpg is jaw dropping (GM!). I'm not the one that still advertises "more horsepower, more horsepower!" Hey, the used cars currently available DO NOT get good gas mileage. They suck, and that's not much better than the current car I drive, which is now 10 years old.
For Pete's sake, I already pay way too much taxes so that our govt can take us to war! Stupid generalizations of that nature take us a step backwards, and just make me sick. I hope you get stuck with more taxes, obviously YOU can afford it! Oh and if you're driving a mega efficient car, I'd like to buy it off you...for cheap!

If you want to curb usage what you do is convert directly from an income tax to a consumption tax.

The only sure-fire way to reduce petroleum use is rationing. The more than doubling in gas prices since 2000 has had little effect on consumption. If we cut oil imports by 1MMbbl/day each month then in 2 years what happens in Iraq or Iran or Venasuela no longer matters and we can keep our troops home. The $300 billion per year going to OPEC et al can be used to help working families and the retired to become more energy efficient. Cont. from above: _ ____Rebuild/replace vehicles' (7-10yrs old->100,000+ miles) drive system (engine, transmission, subsystems) with better/newer ones (a bit more power, much better fuel economy). The military often does this with its fleets of vehicles (air, land, sea) at a fraction of original total costs. While not exactly cheap ($5,000-$10,000 for car/truck), it does give an otherwise good automobile a new 5-10+ years of viability. Incorporating newest techs (or ones like 5-6 gear trans) to these retrofits may help defray the costs of developing new tech over a larger production run (make lots, per unit cost comes down). _ ____$5,000 may be within the reach of the working class with subsidies funded by increased gas tax. Besides, if they are going to buy a used car for $3,000, a subsidy of$5-10 grand (for drive system replacement) may make the $3,000 last a lot longer than a car for$3-5 grand would under ordinary situations.

Richard:

You are right, there is no workable aftermarket bolt-ons to somehow noticeably improve fuel efficiency. But there is some staff which could slightly improve fuel efficiency (aside of usual advices for defensive driving habits and new spark plugs)
1. Synthetic oil, if bought in Costco and alike, is affordable, last 50% longer, decreases engine wear by factor of two, and gives 2-3% improvement in max power and fuel efficiency.
2. Buy cigarette lighter plugging air compressor and digital gauge (30\$), and maintain pressure in your tires – twice a month in your own garage and on cold wheels. I also carry it with me and about once a year have opportunity to repair and inflate punctured tire to me or my friend on the spot
3. Buy and change your transmission fluid – old one wastes noticeable amount of power and fuel.
4. Critical thing to maintain fuel efficiency (and pass emission test) is proper work of oxygen sensor. It is located where all exhaust runners are connected to one pipe. Just measure voltage between ground and one of the not-white wires coming out of sensor – on heated car it should constantly wary between 0.2 and 0.8 volt. Use digital multimeter only. If not working properly, replace immediately – you are wasting 10% fuel and place triple wear on engine. On internet generic oxygen sensors are fairly cheap.

Monk, Cannot buy a hybrid? So what. A standard Corolla/Civic or whatever get nearly the same real world mpg (that is with headlights or a/c)... Or get a TDI VW for 45+mpg... Or find an old 80's econobox (Metro, Justy, etc) that got 50+ mpg.

Hybrids are about decrease emissions not increased mpg. Heck, many are coming out with v6's. :(

Great, so we stop producing in the US where we do it (realtively) efficiently energy-wise, and move production of goods to China where they use more coal to produce more energy because they can't use the energy as efficiently. Then they ship the goods back to us, using even more energy in the transportation. Whoever thought that's a good idea is a bonehead.

I like the idea of a consumption tax, but it would never be enacted. Too much power in the hands of the people. Income taxes provide a dependable revenue stream, but people can control their spending to a much greater extent. Don't like the current Administration? Make your displeasure felt by delaying that new car purchase until after the next election.

It would also encourage people save more, and the financial industries probably wouldn't like that sort of thing either. They'd much prefer you to drive up your credit card debt than leave money just sitting in your savings account collecting interest.

I like the idea of an oil import fee. I would imagine that there are counterpoints to this, but it seems like it would bring in revenue, discourage importing oil and encourage domestic exploration, production and alternatives.

"I like the idea of an oil import fee"
There's tens of Billion of dollars at stake. Do you think
Bush Co. would allow it!!!

Oil consumption will drop further in USA for few reasons.
* SUV sales are falling
* Electric heaters are used to supplement the centralized Oil heating system.
* Some of the oil-fired power plants may move to Coal / Gas / Wind.