US Oil Demand Picture Offers Nothing to Either Oil Industry or Climate Community

US petroleum consumption grew by 0.95% last year, highlighting the current drag on global oil demand growth. For years, weaker OECD demand growth was masked by strong demand in Non-OECD regions. But since the year 2010, a new pattern of demand has slowly emerged, and it’s the primary reason why oil prices have found an equilibrium, at much lower levels.

There’s no question, however, that US oil demand has stabilized since the great recession. Economic recovery and booming auto sales have been balanced by slower population growth, migration back to the cities, and the rise of transportation alternatives—rail especially. Seen this way, the portrait of US oil demand is one of a standoff. The country has pursued “some” of the measures needed to constrain further oil demand growth, but not enough to push demand into outright decline.

One bright spot is that the oil intensity of the US is, in fact, in well articulated decline. This was a given during the country’s deindustrialization period from 1980-2000. Accordingly, pointing out America’s falling per capita or oil/GDP, during those two decades, was not particularly instructive. However, that per capita oil consumption has fallen since the year 2000 does merit attention. | see: US Per Capita Oil Consumption – Million btu 2000-2016.

Unfortunately, the US today offers no encouragement to the oil industry, which needs higher demand growth, or the climate community, which wants to see outright oil use declines. This blog has discussed frequently the failure to distinguish between growth and dependency in energy analysis, and the unhelpful intermixing of the two phenomenon. The US has been stuck in long-term dependency on oil, and continues to pursue, at best, tweaks at the margin of policy and infrastructure. But today’s level of oil demand was first reached 40 years ago, in 1977. So it’s pointless, for example, to hover over the weekly or monthly data-noise in US oil consumption, hoping to find growth.

The global oil industry claims confidence in another 25 years of demand growth. But, internally, its likely the industry is paying more attention than they’ll admit to the risk that oil demand growth falls towards zero. If we group US policy and technology trends together—and add in population trends—the US doesn’t represent a growth center for oil. But the US today does represent, surprisingly, a center for slow progress. Oil dependency, without meaningful oil consumption declines, remains the default position.

–Gregor Macdonald

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