[Graeme]

The End of Energy Obesity: Breaking Today’s Energy Addiction for a Prosperous and Secure Tomorrow

$this->bbcode_second_pass_quote('', 'A')nother quarter gone by. That makes three since the foundations blew out from underneath Lehman Brothers and six quarters since the start of the U.S. recession at the end of 2007. It seems like the negativity is lasting an eternity, and in terms of economic cycles it is. Since the Great Depression, which lasted 14 quarters, the longest recession has been five quarters long, 1981 to 1982. So, at six quarters and counting, the new tag line for our current malaise, “The Great Recession,” seems appropriate.

Recovering-economy-equals-higher-oil-prices is a mostly valid notion in a “peak oil” world; however, everyone in the oil business should be aware that the relationship between economy and demand for petroleum products is changing significantly in mature western countries -- a block of nations that I call the “Wealthy World.” In these 30 or so rich countries, where 46 million of the world’s 84 million barrels a day of petroleum are consumed, positive economic activity no longer has much if any impact on demand growth. Put another way, don’t assume that more oil will be guzzled in Wealthy World when the big economies of the United States, Japan and European Union break out of their six-quarter blue funk.

First, let’s be clear that we are not in a recession, but a contraction. Recession means a slowdown in growth, contraction means outright shrinkage. The wealth of Wealthy World economies, of which the United States is the largest, kept shrinking through the second quarter, making them poorer on a year-over-year basis for the first time since the Second World War. Consensus estimates suggest that when the second-quarter numbers get reported, U.S. shrinkage will be around two and three per cent, a major bout of wallet tightening that, not surprisingly, has led to unemployment of 9.5 per cent (as reported last week).

For oil demand, the distinction between recession and contraction is important, because GDP growth and oil consumption typically move in tandem, especially in industrializing nations. So an economic contraction translates into a fall in absolute oil consumption, not just a stunting of growth.

[greenupma]

Now, add to the contraction the fact that investment in renewable energy is going at a fast pace. Last year, it was $155 billion, and this year it will be slightly less, but it is expected to pick up considerably from next year once again.

This will have a two-pronged effect: The world is in contraction and so needs less oil; now even a part of that lesser amount of oil (and coal and natural gas) will be substituted by solar, wind, geothermal and biofuels. This could really mean a big blow for oil

Now, I wouldn't be so optimistic as to call it end of oil obesity, but I think we are on course to getting there in a decade's time

[lowem]

I'm waiting for those batteries.
Been a long wait.