US Fossil Fuel Consumption Has Peaked, and Will Never Return

US fossil fuel consumption from coal, oil, and natural gas peaked ten years ago in 2007 at 85.927 quadrillion btu, and is unlikely to ever return. There are a number of trends underneath that peak that are worth mentioning. Briefly, coal has been in superdecline; oil consumption is back to levels last seen in the late 1990’s; and natural gas, bucking the trend, has made an enormous consumption advance. And then of course, there is the revolution taking place in wind and solar. Last year, 2016, total fossil fuel consumption came in at 78.569 quadrillion btu, despite, over the past decade, a US population advance of 25 million people. As most analysts now understand, the US will easily meet its Paris goals regardless of policy because economics have now taken over. US emissions have entered long term decline. Indeed, if you think US fossil fuel consumption hasn’t peaked, and is going to start rising again to make new all time highs, you’d be obligated to explain why. Or better, how.

Let’s run through the underlying trends in the three main fossil fuels, and then take a final look at the most updated trends in wind and solar power.

Coal. A terrible thing happened to coal over the past decade. First, natural gas undercut coal in price. Then, wind and solar started to undercut coal in price. Finally, it just so happened that these changing economics took place right as a large tranche of the US coal fleet came into the end of its lifecycle. Had much of the US coal fleet come to retirement, say, in the 1990’s, the country would be saddled with a much younger, harder-to-dislodge fleet. Accordingly, US coal consumption–which is upticking a little bit from low levels this year–is in superdecline. Unfortunately for coal, there is no way to claw back its lost competitiveness in a world where wind and solar power are becoming the cheapest forms of new electricity. So if you are going to make a case that future US fossil fuel consumption will recover to a new peak, you won’t get help from coal.

Oil. Why did US consumption of oil stop growing? And when did it stop growing? As suggested previously on the blog, US oil consumption can be broken into roughly two distinct eras. The first was the adoption era in which the economy, population, and oil-based industry grew uninterrupted until the late 1970’s. Since then, US oil consumption has not grown, but rather, oscillated. This should be more accurately called the dependency era. As such, the last 30-40 years have been a time of complacency and risk for the global oil industry because the US has been, for all that time, a dependable market for oil but not a growth market for oil. That technology has finally found a way to start eating at the margins of this dependency presents a very dangerous moment for oil producers. There is risk that as the acceleration of EV adoption really takes off, that US oil consumption could enter decline as early as 2020. Many will disagree. But of those who disagree: would you be willing to explain how US oil consumption will break out of its dependency phase, and enter a new growth phase, something it’s failed to do for decades?

Natural Gas. How did we eat away at so much coal consumption, while shifting more of the economy over to the platform of electricity? Here’s how: natural gas. The US is producing more NG, exporting more NG, and using more of its own NG. Natural gas production in Pennsylvania is up more than 10X. In North America, there is so much economically recoverable natural gas it’s frankly scary. Importantly, the US is installing a brand new fleet of natural gas fired power generation and in contrast to the end-of-life coal fleet, this fleet is young. The future looks great for natural gas growth: with the exception of one problem…discussed below.

Wind+Solar. Not only will US consumption of all fossil fuels fail to advance to new heights on the back of natural gas alone, but, natural gas itself will soon succumb to wind and solar power. Combined wind and solar will eat away, and then destroy the market share growth of natural gas, in the same way natural gas forced coal into zero growth, and then decline. As of 2016, combined Wind+Solar had already reached 6.9% of the total electricity market. By next year, combined Wind+Solar will cross a 10% share for the first time. And by 2020, that share will reach 14%. You can also spot one, notable phenomenon in the chart below: the total system demand for electricity is flatlining. Ergo, one energy source’s gain is another energy source’s loss.

Will electricity consumption continue to flatline? As you look at the chart of total electricity generation once more, consider the following: increasingly, US electricity output will follow the course of transportation demand as EV for both personal, industrial, and municipal use are deployed. Perhaps electricity generation will rise again–in fact, it probably will, starting next decade. As EV take market share from oil, however, wind and solar will increasingly supply the marginal growth of energy demand from EV. Perhaps someone would like to make the case that transportation demand crossing over to the electrical grid will be so swift, that the US will once again, at least briefly, have to call on fossil fuel resources. Maybe that happens for a short time. But how much lower will total US consumption of fossil fuels be at that time? The building blocks to a US energy system in which wind and solar are increasingly meeting marginal demand growth are easy to put together. The building blocks to a sustained recovery in total fossil fuel consumption are, by contrast, hard to find.

–Gregor Macdonald

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  • tedshepherd

    What is “EV”? How did the author decide not to explain that expression with his first use of it? Way to go, making readers feel ignorant or thinking the writer is aloof.

  • Ex Democrat

    Renewable energy has grown enormously. This last weekend I went to Lubbock, Texas, from Dallas by way of Abilene. I hadn’t been that way for a decade. There were wind turbines in evidence from the highway back in 2007, but now the trip is a renewable energy wonder to behold: there are literally hundreds of giant wind turbines, sometimes for many miles on end, taking up whole horizon vistas.

    See:

    http://www.cbsnews.com/news/texas-is-leading-the-way-in-renewable-energy/#ampsharehttpwwwcbsnewscomnewstexas-is-leading-the-way-in-renewable-energy

  • Texas is amazing. Here is the percentage of Texas electricity use that was provided by combined wind and solar, in the first five months of this year:

    20.83% May
    26.25% April
    25.60% March
    22.08% February
    19.02% January

    Of course, the majority of that share is Wind power.

    G

  • John Brown

    A great article which shows how corrupt the Paris accords were. The USA will likely be the only country that actually achieves the targets and now that Trump has torn up that piece of corruption we won’t be giving tens of billions to corrupt criminal regimes. Meanwhile you have to ask yourself why oil is over $30 a gallon. The glut remains even as Saudi Arabia has cut its own production back further and further which only puts huge capacity on standby and keeps oil artificially high spurring more production and capacity in places like the USA where natural gas and re-newables are reducing the demand for oil. However, I’m not complaining at the collusion that keeps oil prices around $50. It just guarantees more U.S. production, more natural gas, more solar and more wind.

  • stevenjb1

    Electric Vehicles instead of ICE automobiles (internal combustion engine or gas vehicles).

  • Oil is one of the most expensive heating fuels as well as the dirtiest. If states like New York are to meet their goal of reducing carbon emissions 80% by 2050, they must ensure that most oil burners are replaced by electric heat pumps. A conversion to gas won’t be enough to meet the goal.

    Already, companies like Dandelion, the recent Google X spin-out, are moving to dramatically increase the rate of adoption of heat pumps. In future decades, we’ll see the use of heating oil diminish as heat pumps join natural gas as the dominant heating technology.

  • stevenjb1

    Heat pumps and electric cars fueled by nuclear power and renewable energy coupled with storage… sounds like a plan.