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Study Shows U.S. Oil Consumption On The Decline

Posted in auto industry, Emissions, Environment, Newsworthy by Kurt Ernst | December 21st, 2010 | 6 Responses |

For seven decades, the United States consumed the lion’s share of the world’s oil. Excluding recessions and depressions, when drivers reduced the amount of miles driven, U.S. demand for oil has consistently shown growth year on year, peaking with the consumption of 371.5 million gallons of gasoline in 2006. Today, in 2010, that usage has dropped by 8 percent, down to 344 million gallons of gas refined from 8.2 million barrels of oil. The reasons behind the decline are varied, but both U.S. government and oil industry executives believe that demand has peaked for good.

First, there’s the issue of the economy, the 800 pound gorilla in the room that no one wants to confront directly. Many American households have been reduced to a single income, or double incomes at a fraction of pre-crash earnings. Jobs that existed in 2006 will take years, possibly decades, to return. Some jobs and some entire industries won’t ever see that level of employment again, as bleak as that may sound. Less disposable income means reducing the number of cars owned and the number of miles driven.

Beginning in 2012, automakers will need to increase fuel economy from 27.5 mpg across cars and light trucks to 30.1 mpg. By 2016, that CAFE standard rises to 35.5 mpg, which has automakers scrambling to design and build more fuel efficient cars and trucks. Like them or not, hybrids are likely to represent a significant portion of the new vehicle catalog in the next five years.

For better or for worse, blended fuels (gasoline mixed with ethanol or other biofuels) will become more prevalent. This isn’t a concern for new cars, which are being built to accommodate ethanol enhanced fuels; cars built before 2006, on the other hand, are likely to encounter problems running high ethanol content fuels. By 2022, the amount of biofuel added to gasoline will increase more than 2.5 times the amount added in 2011. Car collectors beware.

There are other factors at work as well. People are commuting shorter distances to work, and cheap airfares have made cross-country road trips a thing of the past. Some experts believe that our oil usage will fall to 1969 levels (5.4 million barrels a day) by 2030, while others don’t believe it will drop below 6.6 million barrels per day.

If the U.S. economy suddenly rebounds, and if demand in other parts of the world decreases (reducing oil prices), the decline could reverse. No one expects that to happen any time soon, so expect gas prices to stay where they are for the foreseeable future.

Source: Fox News, via Left Lane News

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6 Responses

  1. Mark Smith says:

    Kurt,

    Something is wrong with the math here. The post says that 344 million gallons of gas comes from 8.2 million barrels of oil. 1 barrel of oil is 42 gallons of oil, but you don’t get 42 gallons of gas out of this. The US average ranges from 18.4-19.5 gallons of gas per barrel and the record is in the 21 gallon per barrel range. I’m not arguing with the logic or results, just the actual numbers.

  2. eddie_357 says:

    what about china how is that going to effect ours or global prices when they are buying more and more gas to fuel their growth.

  3. Kurt Ernst says:

    Mark, the numbers are from Fox news, so I’m not sure if it was a typo or simply bad math.

    eddie, it’s not just China whose ramping up consumption; India has a growing middle class and is a huge auto market these days. More global demand translates to one thing: higher prices at the pump.

  4. Aaron says:

    Could you guys do an article on corn ethanol and how screwed up it is? I used to think it was the next great thing. Turns out it sucks. It burns dirtier than regular gas, gums up easier which sucks for motorcycle owners, and it takes 1.3 gallons to make 1 ethanol gallon! Did I miss anything?

  5. Kurt Ernst says:

    Aaron, thanks for the suggestion. I’ll do some research on it and see if I can turn it into a feature article.

  6. crispy says:

    I’m with Mark – isn’t math fun? (I know this story is from over 3 months ago, just catching up on my reading from my time in Afghanistan).

    If consumption dropped to 8.2 million barrels of oil for the YEAR 2010; and we’re looking forward to a DAILY consumption rate forecast to be between 5.6 and 6.6 million barrels – seems we’d be going in the wrong direction. 5.6m/day = 2.04 billion/year, an increase of roughly 25,000%.

    At first I thought it was 8.2 billion last year vs. million – what’s a factor of 1,000 among friends? – but that would be 224.6 million barrels a day – probably on the high side if we think we’re getting down to 5-6 million/day (a reduction of around 3,700% in just a few years). BL, thanks to Fox News not checking their figures, or interviewing idiots, or both – this article tells us essentially nothing.

    Mileage may vary.