Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on June 15, 2013
US Oil Demand Has Peaked And Oil Markets Don’t Care
There are lots of reasons for Americans to use less oil.
They’ll improve the environment.
If it involves driving less, they’ll save lives.
And in the long run, they’ll save money.
But a collective reduction in fuel use is not yet enough to put a long-term dent in global oil prices.
Here’s a chart from AllianceBernstein’s Bob Brackett charting crude prices (red) versus U.S. oil demand (green —as measured by petroleum supplied).
The green line goes down.
The red line does not:
Bob Brackett/AllianceBernstein
Brackett says this shows “a price elasticity imposed on top of a longer trend.”
That larger trend: U.S. oil demand has peaked:
We never see a return to peak demand of the mid-2000s. We have passed “peak oil” demand for the U.S. by more than 2 million barrels per day. The large shift as oil prices spiked was structural, especially for non-transport use (i.e., residual into power). For transports, it was partly structural (driving less) but also secular (efficiency gains).
Rather, oil remains a global commodity whose prices will be determined by demand from all over.
Like China, for instance.
Here’s Brackett’s from a note a couple weeks ago on this:
Our forecast for China’s oil demand growth remains above consensus estimates, consistent with
our long-term view on price (which, as we wrote earlier this week is bullish —ed). Based on our analysis of vehicle growth in China and likely improvement in fuel efficiency, we expect oil demand will increase to 12.9mmbpd by 2018. This remains 0.9mmbpd above estimates from the IEA and is a further reason we remain constructive long term on oil demand and oil price. Overall we expect China’s oil elasticity to remain at about 0.7x GDP over the next 5 years.
Our expectations for paying less at the pump should probably be the thing that more closely tracks U.S. demand.
11 Comments on "US Oil Demand Has Peaked And Oil Markets Don’t Care"
Beery on Sat, 15th Jun 2013 5:52 pm
“A price elasticity”? Give me a break!
There is no such thing as ‘price elasticity’. Price is a function of supply and demand. What we’re seeing is demand elasticity imposed by limited supply and an inability on the part of the average gasoline consumer to pay any more at the pump.
Juan Pueblo on Sat, 15th Jun 2013 6:14 pm
Some people love making things hard. This is very easy to explain. US demand has fallen less than developing countries has grown, and global oil demand has kept growing regardless. It seems very hard for some Americans to accept that our country is becoming increasingly irrelevant to global markets. This trends will continue.
DC on Sat, 15th Jun 2013 6:26 pm
The US of Oil is only less because they have no choice in the matter. Oversaturated road networks, and an economy in decline are ‘driving’ the drop in demand(sorry. It sure as hell isnt ‘efficient’ gas-burners ROFL! Demand destruction is working its magic-not ‘elasticity’. Demand destruction is clearly showing us its the ONLY effective way to get amerikans fat butts out of those SUVS and off the roads.
‘Public'(read corporate) policy, hasn’t done a damn thing in the US. Now, all we need is that $10.00 gallon gas to finish the job-bring it on!
They’ll improve the environment.
95% of amerikans dont give a rats ass about the environment.
If it involves driving less, they’ll save lives.
RoFL! 40k+ amerikans die and millions injured every year. Over 100 people die on roads every single day in the US of sprawl-no one cares.
And in the long run, they’ll save money.
Now this is something DO care about. Historically, how they have done this is subsidies for both consumers and producers of fossil-fuel AND stealing oil form the 3rd world via military juntas and oppressive proxy states. Americans just aren’t into saving money by curtailing there fossil-fuel activities. Not the amerikan way.
jodell8964 on Sat, 15th Jun 2013 6:29 pm
If driving less saves lives, how does that save oil and the environment? The world population increases by about 200,000 souls per day. If Americans live longer that decreases the death rate by a small %. Longer living humans actually increase oil consumption and cause detrimental environmental issues. Perhaps we should lobby for the decriminalization of drinking and driving.
Plantagenet on Sat, 15th Jun 2013 6:43 pm
Americans aren’t using less oil because they’ve suddenly started caring about the environment. Americans are using less oil because they are increasingly poor, on government disability or unemployment benefits, or underemployed in a crummy part-time job.
A part-time worker earning 8 bucks an hour just isn’t going to have the money to drive as much as he did back when he had a full-time factory job and earned $40 bucks an hour.
Norm on Sat, 15th Jun 2013 7:35 pm
‘Demand Destruction’ is a bogus phrase by goofball authors with a twisted motive.
If oil consumption should fall, they say ‘nobody needs the oil anymore because they didn’t want it. That is so bogus.
They wanted it, they would have bought at a lower price, but at the higher price cannot afford it.
Peak Oil deniers like to say ‘demand destruction’ a lot. Reality is what the posters ahead of me said. ex-middle class is too poor to pay higher fuel prices.
Just a ground-level interpretation of the peak oil phenomenon. Those who used to burn up a lot, now find they can’t afford the oil. In reality there’s not enough of it. But they deny anyway and call it ‘demand destruction’.
Others on Sat, 15th Jun 2013 9:58 pm
Latest model vehicles are more fuel efficient than those sold 10 – 12 years ago.
More Taxis were switching over from Crown Vic/Grand Marq to Prius and other Hybrids.
People take more public transport as Mass & Light transit are expanding. Hence US oil consumption will continue to decline.
Beery on Sun, 16th Jun 2013 2:36 am
Hate to burst your bubble, Others, but no one who used to drive a Crown Victoria or Grand Marquis (full size sedans) is now driving a Prius (which is a small compact car). There’s only one reason gasoline consumption is down and public transport is expanding – working class Americans can’t afford to drive.
GregT on Sun, 16th Jun 2013 2:49 am
“US Oil Demand Has Peaked And Oil Markets Don’t Care”
Why would they care? The US is not at the centre of the universe. The Good old US of A accounts for less than 5% of the world’s population. Economies are emerging elsewhere and the oil will be bought where ever it can be afforded.
Others on Sun, 16th Jun 2013 3:19 am
Mr Beery
Crown Victoria or Grand Marquis were the de-facto vehicles in Taxis earlier.
Now all the Taxis were moving to Hybrids in many cities. That’s what I meant.
Also some Taxis were switching over to CNG which uses 0 Gasoline.
All the remaining big cars should be put in ships and sent to Middle east where gas is cheap.
BillT on Sun, 16th Jun 2013 5:51 am
Others, there are about 250,000,000 personal vehicles in the US. In a good economy, turnover takes about 10 – 15 years. One million Prius taxis is a drop in the bucket, and fewer will be using their services as salaries decline. A bus will be their main transport soon.
And it is ‘demand destruction’ by financial means, Norm. Demand for a lot of things is being destroyed by the return to reality in the US, meaning lower incomes and less to spend on non-necessities. If you want to know what is a necessary, look at the year 1900 for an example.