Petrol: the long, slow decline

An interesting graph came up on the TransportBlog twitter feed a couple of weeks ago, courtesy of the Wall Street Journal:

Pretty self-explanatory, but what you’re seeing is that gasoline (or petrol) consumption in the US grew until the mid-2000s, and has since fallen. The projections from the government’s Energy Information Administration, which a decade ago were assuming that people would keep consuming more and more petrol, started to change tack in 2010 (assuming pretty flat demand) and even more in 2014 (assuming that demand would keep falling). This is the long, slow decline of petrol demand in the US, although some might think that decline actually looks pretty fast.

There’s another graph that goes along with the one above – they both come from this report, page 246ish. The other graph looks at consumption of all oil products (“petroleum” as they call it in the US).

Here, the story is similar but with a slower decline expected (fuels like diesel and other uses of oil are likely to be less affected by the demand downturn).

The US report gives the following explanation (forgive the wall of text, apparently paragraph breaks were high on the government’s cost-cutting list when the GFC hit):

The decline in petroleum consumption, starting in 2006, was unexpected. In the case of energy, industry-standard benchmark projections are produced annually by the Energy Information Administration (EIA) in its Annual Energy Outlook. Revisions to those projections include the effects of unforeseen developments in the energy sector. Figure 6-2a shows U.S. petroleum consumption since 1950 and projected consumption from the 2006, 2010, and 2014 editions of the Annual Energy Outlook. Only nine years ago, EIA projected an increase in petroleum consumption during the subsequent 25 years. But events dramatically affected subsequent projections: by 2010, EIA had reduced both the level and rate of growth of its projection; its 2014 outlook now projects petroleum consumption to decline through 2030 after a slight increase over the next five years. The reversal in projected petroleum consumption is led by the reversal in actual and projected gasoline consumption (Figure 6-2b): the 2014 EIA projection of consumption in 2030 is 44 percent below the projection made in 2006. Actual gasoline consumption declined between 2006 and 2010 mainly due to the recession and rising fuel prices, but much of the revision to the 2030 levels reflects the largely unexpected fuel economy improvements stemming from the Energy Independence and Security Act of 2007 and the Administration’s subsequent tightening of those standards. The 2014 projections further reflect the 2012 light-duty vehicle fuel economy and greenhouse gas emissions rate standards, which apply to model years 2017 through 2025 [JP note: the Obama administration tightened the Corporate Average Fuel Economy standards in the US for the first time since the 80s, incentivising US manufacturers to improve their woeful fuel economy]. The Administration’s fuel economy and greenhouse gas standards for medium and heavy-duty trucks also contribute to the reduction in projected petroleum consumption between the 2010 and 2014 Outlooks.

Let’s look at the same stats for New Zealand. It’s a little tricky, since the MBIE hasn’t produced forecasts of oil and transport demand since 2011, but long story short they were still projecting pretty steady increases for transport fuels (mainly petrol) and oil demand at that time.

Historical statistics, though, show that NZ’s petrol consumption peaked in 2007 and have begun a slow decline since then (although 2014 figures, not yet out, are likely to show a slight uptick from lower petrol prices towards the end of the year).

It seems pretty likely that New Zealand is going to see a long, slow decline in petrol demand as well.

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