Home > Economics - General, Environment > Another encouraging graph

Another encouraging graph

March 30th, 2013

Wandering around the web, I found this OECD graph on per-capita oil use in residential/commercial/agricultural uses reproduced here


It raises some interesting points

Most importantly, in sense that is actually relevant to most of the arguments on this topic, peak oil happened before most of us (not me, sadly) were born[1]. That is, on average, people in our parents’ generation used twice as much oil each year, in residential, commercial and agricultural uses, as we are using today. The turnaround took a bit longer for motor fuel, but the basic patterns is the same. Looking at this graph, the idea that ever-increasing use of oil is necessary to modern life is obviously false. Extrapolation is dangerous, but the graph implies that OECD consumption of oil is converging to the LDC level, and not, as most peak oil analyses assume, vice versa

This outcome is mainly the result of the fourfold increase in the price of oil in 1973. Prices have fluctuated since then, but on average the 1973 increase has been sustained. In addition, the oil shock led to the adoption of a variety of policies aimed at reducing reliance on oil. As with the price increase, these policies haven’t been pursued consistently, but the general tendency has been to discourage oil use. Together, over four decades, prices and policies have reduced consumption per person by half. We’ll need more vigorous measures to reduce carbon emissions per person by 80 per cent, but there’s no reason it can’t be done.

Oil was mostly replaced by gas and coal-fired electricity, so there wasn’t a big reduction in carbon emissions. But there’s a strong similarity between arguments about the special properties of oil (easy storage and transport, energy density and so on) that made it the preferred fuel in nearly all uses in 1973, and arguments about the various inconveniences of renewables (intermittency and storage problems). The example of oil shows that if the price signals are right, people will find a way to switch from one energy source to another, regardless of the convenient properties of the original source.

The other source of reduction in oil use was increased energy efficiency. Again the graph above is a convenient refutation of claims about an inevitable ‘rebound’ effect. If increased energy efficiency is a response to a higher prices, there will be no such effect.

fn.1 BTW, it was my birthday yesterday – thanks to Megan (who dug this fact out of the archives) and others for birthday wishes

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  1. Ikonoclast
    March 30th, 2013 at 09:07 | #1

    Happy Birthday, I should have remembered. You have the same birthday as our 19 year old twins.

  2. Ikonoclast
    March 30th, 2013 at 09:18 | #2

    Regarding the “encouraging graph” in your post, I think it’s a curate’s egg; good in parts.

    First, the good points;

    (1) It illustrates productive capacity can be de-coupled progressively from oil use. (Note: It does not show that productive capacity can be de-coupled from energy use.)

    (2) It illustrates a slow progress towards equity in use of a prime energy product. (The developing world is getting more per head on a relative basis as our use per head declines.)

    Now, the bad points;

    (1) Very disturbingly, it has been accompanied by a huge increase in coal use.
    (2) World CO2 emissions continue to rise at something like 3% a year except for recession years.
    (3) Catastrophic climate change still looks very likely on these numbers.
    (4) The progressive change to solar and wind power and the phasing out of all fossil fuels is still lagging at least 20 years on where is should be.

    I tend to take a very straightforward view. CO2 emissions are still going up and this is the ONLY number that counts. If we can’t bring this number down soon and fast all the rest is moot. With the long lead times in the CO2 and climate systems, even the damage we have done so far would take 100s if not 1,000s of years to abate or “decay” even if we reduced CO2 emissions to zero tomorrow.

  3. Hermit
    March 30th, 2013 at 10:04 | #3

    The question is how much lower oil consumption can go without hurting world GDP or using more coal. Thanks largely to China coal burning has increased ~40% since 2000 (ref. Grist Org) and now I guess millions of Chinese want to drive cars. When oil production declines from its present plateau I would think that means a scramble for the dwindling supply. At some point alternatives may not be enough, perhaps sooner than we think.

    Here in Oz we have a vast urban sprawl that depends on the car for shopping, recreation and a lot of commuting. I doubt the mortgage stressed outer suburb home owner will buy a Holden Volt for $60k and charge it with a huge bank of solar panels. Before that aviation could take a hit. I think this will become more clear in the next decade. Perhaps Joe Public realises this and has been driving less or getting a smaller car in anticipation.

  4. iain
    March 30th, 2013 at 11:04 | #4

    4,000 boe/per day per person?

  5. iain
    March 30th, 2013 at 11:24 | #5

    Rather than dodgy graphs from forums, perhaps a real graph of energy use per person is worthwhile/ is there a peak in sight for this? http://bit.ly/YP0dZE

  6. TerjeP
    March 30th, 2013 at 11:26 | #6

    The graph kind of makes peak oil alarmists look a bit stupid. Civilisation hasn’t ended.

  7. iain
    March 30th, 2013 at 11:54 | #7

    @TerjeP To be fair, I think until the downslope of total liquids production is reached it is not really worthwhile to make statements like this. If there is no ready alternative to oil, then there will be social issues. It is important to keep this in mind (but agree that civilisation won’t end).

    Also, the scaling on that graph isn’t right. I wouldn’t recommend using it, for fear of looking stupid myself.

    A promising energy alternative is at this link. http://bit.ly/10vW1f4

    As a comment, it is obviously not logically consistent to argue for these types alternatives and not support selling electricity assets (at some future stage).

  8. March 30th, 2013 at 12:27 | #8

    The “per capita” is the trick.

    From 1970 to 2009 the population went from 3.7billion to 6.8billion.

    The extra 3 billion people didn’t equally share the “consumption”.

    Terje, can you be more specific?

    eg: Is peak oil “real”?
    Is it real but off in the distant future?
    It is real but not a problem if oil production declines rather than grows because….?

    Is it correct to read your statement as: “Peak oil alarmists predict the end of civilisation”?
    Can you point to examples of the alarmism?

  9. Hermit
    March 30th, 2013 at 13:01 | #9

    It is sobering to look at the oil supply projections of ExxonMobil which you would expect to be optimistic since it’s their bread and butter. See the recent article in The Oil Drum / Tech Talk. The world is currently consuming about 90 millions barrels of liquid fuel a day of which about 70 mbpd is crude oil. EM concede crude is declining despite Iraq returning to prewar output. The other liquids include gas condensate, Canadian tar sands and US ‘fracked’ shale oil. However volumes for biofuels may be misleading since corn ethanol for example uses diesel tractors and gas derived fertiliser so scarcely adds any new energy.

    Whether in desperation we will turn to coal-to-liquids remains to be seen , carbon tax or not. Aviation seemingly will always require liquid fuel. Here I think truckies will turn to compressed or chilled liquid natural gas as the oil price escalates. That in turn puts more pressure on the gas price making coal more competitive for electricity, again carbon tax or not. I think there are partial solutions to these looming shortages but we seem unable to accept them, for example restrict LNG exports or make electricity and hydrogen with nukes.

  10. March 30th, 2013 at 13:01 | #10

    This is from 1995 but it contains lots of interesting graphs and information.

    The short message is: total oil consumption has steadily gone up.


  11. John quiggin
    March 30th, 2013 at 13:11 | #11

    @iain OECD is dodgy so we should look at a tangentially related data series from the ever reliable Google instead? Reread the post.

  12. iain
    March 30th, 2013 at 13:17 | #12

    @John quiggin World consumption is 88 million barrels a day. So you think OECD consumption is 4,000 barrels a day? Read my moderated post.

  13. Ikonoclast
    March 30th, 2013 at 13:26 | #13


    The graph JQ posted does not really have a lot to say about peak oil. It is tangential in that regard. The thing about peak oil is that disaster or collapse is not instantaneous. One, the run down is gradual. Oil progressively becomes more expensive and harder to source. Two, substitutions can and do occur. There is coal for stationary power instead of oil and diesel. There is gas for petrol in cars. There is nuclear, wind and solar power to make further substitutions.

    However, even the substitution process is fraught with further difficulties. One, more fossil fuels, especially coal, are burnt overall so the CO2 emissions problem worsens. Nuclear fuels are limited and the nonsense about thorium reactors coming on line soon or even ever, is just that, nonsense. Hydro power sites are maxed out and solar and wind need a huge ramping up which may or may not be possible logistically and resource-wise and within a saving time-frame.

    TerjeP, your logic is bit like this. A passenger in your car points out your petrol tank is half empty and mentions it will eventually run out. You call him alarmist and say it hasn’t run out yet.

    The earth’s oil tank is half empty and the cheap and easy half is already gone. There are no celestial filling stations where the earth can top up its oil tank. Ergo, it will run out. When it runs out (substantially) or even during the rundown, there will be a serious energy squeeze or shortage unless other forms of energy are brought on line. Some of those other forms will wreck our climate (coal, gas) and others are non-renewable too like fissile materials. Renewables like solar and wind require a lot of inputs, return only a modest EROEI and may prove challenging to scale up (but we have to try).

    Thus we face a potentially serious energy shortage (even leaving aside the critical climate change issues).

    Your implied timeframe is too short. You think energy collapse will never happen just because it hasn’t happened just a few years after peak oil. The time will come when these things start to bite. I suspect in 10 or 15 years it will be obvious even to the blindest of denialists (LTG and AGW denialists) that we have serious problems.

    When your house is half white-anted you don’t say white ants aren’t a problem because the house has not collapsed yet. You get cracking, kill the white ants and white-anting process, then you remove all damaged sections, replace compromised structural members and finally apply new sheeting and finishing materials. The same thing applies to our energy and productive systems. We really need to get cracking now on rebuilding it all on a new sustainable model before everything does collapse as will inevitably happen under BAU.

  14. Jordan
    March 30th, 2013 at 15:16 | #14

    Energy use is essential to the productivity gains, but not the oil use.
    Replacing human energy with machine energy is where we are heading, but there are few constraints that need to be solved yet.
    Replacing poluting energies sources will require even more of non poluting energy then only the replacement value. It was the price of oil that reduced oil energy per capita, but other fossil fuels are still with low price.

    Considering that fossil fuel use per capita is still above 90% of total energy use can we expect to have such replacement of poluting energy within short future date that is demanded in order to reduce projected AGW without damaging effect on productivity gains?

    Rising population and demanded productivity gains are heading against fossil energy replacement (price of fossil energy) inviting economic crisis and more polution.
    Damage from AGW will demand even more energy for repairing the damage and compounding effect will place us against the wall.
    Speed of replacement of fossil fuels with non poluting energy is nowhere near needed to give uninterupted productivity gains in the future. Endless growth will not be endless.

  15. Jordan
    March 30th, 2013 at 15:33 | #15

    Alternative and nuclear energy use as a percentage of energy use

    GFC slowed total energy use but also damaged the developement of alternative energy due to imagined money/resource deficit.

  16. quokka
    March 30th, 2013 at 15:44 | #16

    That chart does not seem to include oil use in the transport sector. In OECD countries transport appears to be the sector with the greatest increase in final energy use. See IEA Energy Energy Stats “Final consumption by sector” chart for all OECD.

    Total oil use appears to have grown modestly in OECD countries from 1971-2009 with coal about static. The biggest contributors to increased primary energy production have been nuclear and gas. See IEA “Energy production” chart.

    I’d post the links but it would just end up in moderation.

  17. iain
    March 30th, 2013 at 15:53 | #17

    @quokka The graph only shows oil substitution with other fossil fuels in some certain sectors, along with incorrect scaling.

    I find arguing that this graph (for what it is worth) as potentially refuting the inevitability of the rebound effect — to be meaningless.

    In a post peak production world, rebound will be impossible, by definition. Regardless, per capita production of oil peaked at the same time this graph started.

  18. quokka
    March 30th, 2013 at 16:14 | #18


    It’s not clear what the chart implies, other than what the labels say. Some reduction is probably due to efficiency gains, some may be due to gas replacing oil in space heating (I don’t know – you would have to look at it properly). Nuclear may have replaced a bit, especially in France which now has a high use of electrical space heating compared to the rest of Europe. It’s all just really speculation without proper analysis.

    Trying to use this chart as evidence of the falsehood of the rebound effect or for that matter of peak oil is just spinning a bit of a tale. I’ll be impressed when emissions start falling significantly.

  19. paul walter
    March 30th, 2013 at 16:58 | #19

    Anyone who has lived through the era knows it’s probably right.
    The old era of Ford GTHOs and petrol cheap as water died with the Yom Kippur War and subsequent Oil Shock.
    It also shows up in the road bingle fatalities, in SA in the early seventies 360 people a year were dying on the roads and its down to half of that now, despite far more cars being on the roads.
    Whatever else you could convince people of, it wasn’t that we could go to a better public transport system though.
    People did ecology denialism back then, as they do now.

  20. John Quiggin
    March 30th, 2013 at 17:10 | #20

    I agree there’s a problem with scaling. Unfortunately, the OECD and IEA (almost uniquely these days) charge horrendous prices for access to their data, so I can’t fix this. It is easy to check, however, that global output of oil per person peaked a long time ago (1979 IIRC). Since the consumption share of non-OECD countries and of transportation has increased, the trend shown in the graph must be about right.

    And, to restate, if we (OECD residents) can reduce our personal consumption of oil by half in most uses and not even notice, then claims that Peak Oil (in the sense of a peak in global output) will fundamentally change civilisation look pretty implausible.

  21. Jim Rose
    March 30th, 2013 at 17:18 | #21

    John, the OECD collects about 1.5m euro(?) in fees from selling its publications.

    The digital versions of their publications are not free because the loss of fee income would cost jobs inside the OECD. the relevant division are good infighters to protect their revenue.

    When I suggested closing the OECD’s bankrupt pay as you go super generous staff pension scheme to new members, someone crossed the world to visit me in my office to put me right.

  22. Hermit
    March 30th, 2013 at 17:29 | #22

    @John Quiggin
    I think the people of Cyprus and PIGS countries have noticed their economies aren’t as vibrant as a decade ago. We’re seeing the world from an Asia-Pacific viewpoint and it doesn’t look so bad.

    I doubt we can take another big cut in average oil consumption without pain. We depend on those SUVs to take us to fashionable places and bring home trolley loads of exotic groceries. Coles and Woolies need diesel trucks to restock the shelves and farmers need tractors to grow the food. Maybe that first x% cut was the easy bit and the next x% will be a lot harder. This akin to Treasury modelling saying we would tighten our belts year after years post carbon tax. Most of us are doing all we can in the first year.

  23. March 30th, 2013 at 18:09 | #23

    I don’t share the optimism.

    EIA on non-OECD consumption:

    Oil consumption in developing countries that are not part of the Organization of Economic Cooperation and Development (OECD) has risen sharply in recent years. While oil consumption in the OECD countries declined between 2000 and 2010, non-OECD oil consumption increased more than 40 percent. China, India, and Saudi Arabia had the largest growth in oil consumption among the countries in the non-OECD during this period.

    I’m seeing this as simply OECD countries out-sourcing their oil consumption to non-OECD countries while keeping the benefits of that consumption in-house.

  24. TerjeP
    March 30th, 2013 at 20:35 | #24

    TerjeP, your logic is bit like this. A passenger in your car points out your petrol tank is half empty and mentions it will eventually run out. You call him alarmist and say it hasn’t run out yet.

    I wouldn’t refer to such a person as an alarmist. Not unless that person was screaming that we have to look for a petrol station immediately.

  25. Greg vP
    March 30th, 2013 at 20:53 | #25

    I admire your sunny disposition, John. I’m sure it will increase the number of birthdays you celebrate in future.

    Like Megan, though, I am less than convinced by presentations of partial facts (partial in the sense of “not global”). Like Chris Dillow, I’m less than convinced that policies have made a difference. And substitutes are substitutes because they provide less utility at higher cost than the original commodity. There has been a loss compared to the counterfactual. (It has been small in the OECD, though, since people there have been demanding relatively more services and relatively less in the way of material goods for the last few decades.)

    Three points on the bright side, to balance things: Prices work. (Who knew?) Long-range forecasts of energy consumption have always been overestimates (sometimes ludicrously so), as Vaclav Smil discusses at length; it’s unlikely that this will change, so total energy consumption will probably peak before population does. And I’m glad that Nordhaus’s (1973) backstop technology turned out to be photovoltaics rather than fast breeder nuclear.

  26. hc
    March 30th, 2013 at 20:54 | #26

    An interesting fact is that distances travelled by car per capita seem to level off or decline as move to very high incomes. Some transport economists attribute this to a higher value of time for those with high income. There is evidence for this both in the UK and the US. See p. 15 in:


  27. March 30th, 2013 at 20:55 | #27

    The other thing to remember is NET exports.

    As countries (like Australia – 1985, China – 1993, Egypt – 2007, Indonesia – 2004, UK – 2005) go from being net exporters to being net importers their exports basically get taken off the table.

    I’m not convinced that I’m ‘alarmist’ to wonder where all this might be heading in a fairly short time frame.

    Maybe I’m not “screaming”, but is it really alarmist to casually ask where you imagine the next petrol station is?

  28. Phil L
    March 30th, 2013 at 21:16 | #28

    John, your graph and the accompanying coment would seem to imply that we can grow our economies indefinitely without having to worry about energy sources as energy efficiency and substitutions would allow us to grow our way out of earth finite resources. I cannot comment on the validity of this particular graph. but Tim Jackson in Prosperity without growth provides clear evidence that energy consumption overall and GHG emissions in OECD countries have hardly decreased in the lat 30 years. He also argues that the decline of GHG emissions per unit of GDP can be mostly explained by the fact that a lot of the industrial production has migrated from OECD countries to developing economies. This sortt of debunk sthe “angelised GDP” argument which basically says that as our economies “develops” we will be less and less dependent on natural resources. A point also made by Herman Daly.
    Without resorting to an academic argument, there is numerous evidence in our everyday life that so-call services are not ” energy free”. Think about tourism for example and those planes burning fuel to transport tourists or even entertainment and sporting activities: How many kilowatts were burnt at the London Olympics?
    The second law of Thermodynamics, a fundamental principle of physics will prevent us from 1) being able to recycle or substitute 100 % natural resource such as copper,iron etc, 2) to recycle 1 single kwatt of energy.

  29. rog
    March 30th, 2013 at 21:27 | #29

    BP offer their global view

    OECD consumption declined by 1.2% (600,000b/d), the fifth decrease in the past six years, reaching the lowest level since 1995. Outside the OECD, consumption grew by 1.2 million b/d, or 2.8%. Despite strong oil prices, oil consumption growth was below average in producing regions of the Middle East and Africa due to regional unrest. China again recorded the largest increment to global consumption growth (+505,000 b/d, +5.5%) although the growth rate was below the 10-year average.

  30. TerjeP
    March 30th, 2013 at 21:32 | #30

    Maybe I’m not “screaming”, but is it really alarmist to casually ask where you imagine the next petrol station is?

    No it isn’t. I think ammonia has quite a bit of potential as a fuel alternative. Although producing it depends on an abundant primary energy source such as nuclear.

  31. March 30th, 2013 at 21:44 | #31


    So, we’re on a dark desert highway. The tank is half empty. The passenger, in a non-alarmist manner, asks where when and how you intend to next get petrol.

    And you say: “Nuclear!”?

    If I were that passenger I’d be getting a little bit alarmed at that point.

  32. TerjeP
    March 30th, 2013 at 21:55 | #32

    Don’t labour the metaphor too hard Megan.

  33. Mel
    March 31st, 2013 at 00:33 | #33

    James Annan, speaking from inside the mainstream tent, has written a couple of posts in which he expresses mild frustration with the IPCC lead authors, who are possibly overstating climate sensitivity. Here’s his latest post:

    But the overall message of a lowering probability of a high sensitivity is hard to deny. Unless you are Reto Knutti, that is, in which case “my personal view is that the overall assessment hasn’t changed much”. Of course he was only speaking personally there, and what matters in his role as IPCC lead author, is what the (credible) literature actually says.

    Julia Hargreaves (one half of Jules and James) “suggests a 90% chance of the actual change being in the range of 0.5-4.0°C, with a mean of 2.3°C”.

    I suggest these latest findings lead to an even more encouraging graph 🙂

    It will be very interesting to see the final ed. of the coming IPCC and the mainstream reaction to it.

  34. March 31st, 2013 at 00:47 | #34


    Any chance you could address my questions at #8?


  35. jrkrideau
    March 31st, 2013 at 02:17 | #35


    Thank you Megan. I was just going to make that point. Per/capita consumption != total consumption if population is increasing.

  36. Ikonoclast
    March 31st, 2013 at 07:26 | #36


    So everything is cool is it? Climate change is hardly happening at all? We can burn fossil fuels without fear? Is that your essential message? The disappearing Arctic ice means nothing? The winds, pressure systems and ridges circulating the Arctic (which are already changing) are not going to affect anything? The changes in ocean circulation too (with the disappearance of Arctic ice) are also not going to have any significant effects?

    Are the opinions of James Annan “findings” when he “expresses mild frustration” at someone “possibly overstating” something? Are the “suggestions” of Julia Hargreaves already “findings”? How do these minority and very mildy dissenting opinions suddenly become “findings”?

    Might as well call the opinion of one dissenting judge “findings” when the decision of the court went 8-1 against her/his view.

    You are really grasping at straws to legitimate Business As Usual as it destroys the planet. I wonder why you would do that. Usually it’s the Tories and science denialists who do that.

  37. rog
    March 31st, 2013 at 07:36 | #37

    @rog In short

    OECD consumption fell by 600,000 b/d;
    non OECD consumption grew by 1.2M b/d;
    Global consumption grew by 600,000 b/d

    Hardly good news as existing reserves are proving more difficult/dangerous to extract.

  38. John Quiggin
    March 31st, 2013 at 08:38 | #38

    And substitutes are substitutes because they provide less utility at higher cost than the original commodity. There has been a loss compared to the counterfactual. It has been small in the OECD, though, since people there have been demanding relatively more services and relatively less in the way of material goods for the last few decades.)

    This is really the crucial point. Of course, reducing use of oil had costs, because the substitutes were less convenient. And the same will be true for replacing fossil fuels more generally with renewables, and for increasing energy efficiency much further.

    But, as in the case illustrated by the graph, the costs will be small in relation to the economy as a whole: in fact, so small as to be undetectable by casual observation.

  39. John Quiggin
    March 31st, 2013 at 08:42 | #39

    The Annan estimates aren’t as encouraging as all that. Bear in mind that sensitivity is the equilibrium response to a doubling, that is to 550 ppm, which is about what we will get if current promises are adhered to. That still gives a 10 per cent chance of catastrophic (>4.0 degrees) warming. And Business as Usual (what we’ll get with the kind of backsliding promised by Abbott) will very probably produce >3.0 degrees of warming.

  40. John Quiggin
    March 31st, 2013 at 08:50 | #40

    In response to comments about capacity shifting to Asia etc.

    (1) This is a trend that began 40 years ago, when trade with Asia (ex-Japan) was minuscule
    (2) Look at the bottom line in the graph. Income per person in Asia has multiplied many times over, growth in Latin America has been strong, and even Africa has been doing well for a decade or more. Yet there is virtually no increase in non-OECD (non-transport) consumption per person.

    If you want to assess the proposition “We need to consume more oil if living standards are to improve” what matters is consumption per person, not aggregate production/consumption. The evidence shows that this proposition is false for oil, and it is equally false for fossil fuels generally.

  41. Phil L
    March 31st, 2013 at 09:31 | #41

    “If you want to assess the proposition “We need to consume more oil if living standards are to improve” what matters is consumption per person, not aggregate production/consumption. The evidence shows that this proposition is false for oil, and it is equally false for fossil fuels generally”
    A couple of points:
    1) Do we still need living standards to “improve” in OECD countries? All depends on what we mean by “living standards” Do we mean the quantity of stuff (including energy) that we consume? or do we mean ” quality of life” “happiness” etc…(none of which are captured by GDP) ? If we mean the latter, yes we can certainly improve our living standards without consuming more. However, this is not what mainstream neo-classical economics is telling us. According to this paradigm, full employment requires more ” (GDP)growth” hence more production and more consumption of natural resources. In other words, more leisure time spent on yoga, meditation or gardening is not really good for the economy… Look what is happening in my beautiful state of Tasmania: fantastic life style, high level of happiness, but according to the Treasury statistics we are lagging at the bottom of the growth chart!

    2)Overall aggregate consumption/ production does matter if we are thinking about the impact on natural resources, natural sinks and natural eco-systems. Remember the IPAT equation proposed by Ehrlich. If we are only considering OECD countries, yes individual consumption of natural resources is relevant as P is constant or declining and we might think that we are Affluent enough. But there are still six or seven billions human beings (and counting) who would like to be more affluent… How is this going to happen with affecting I ?

  42. TerjeP
    March 31st, 2013 at 09:40 | #42

    Megan – try the Hirsch report.

  43. Ikonoclast
    March 31st, 2013 at 09:40 | #43

    No thermoeconomists would think that “we need to consume more oil if living standards are to improve”. However, they would think we need to consume energy if living standard are to be maintained or improved. They would also think that (after removing energy wastage and increasing the knowledge, technology, service proportion of our econmy) that there would still be some minumum energy use per capita to sustain that type of economy. There are still many energy hungry processes even in the most energy efficient modern society. Feeding people, growing food, transport, electric power needs, power for water, sewarage etc. etc.

    Can we get that energy and stop global warming, that is the issue. We probably could if we followed a crash course of renewable energy creation starting now. Waiting for the very imperfect market to do it is a recipe for disaster.

  44. iain
    March 31st, 2013 at 09:42 | #44

    The graph doesn’t represent transportation fuel usage. Which is where the “magical” properties of oil currently lie.

    Extrapolating substitution practices pre-peak oil, is not relevant when talking about post-peak substitution possibilities (downslope may be much steeper from peak usage, impacting factors such as time available).

    Substitution of some oil pre-peak was well predicted (see limits to growth), arguing otherwise is a strawman.

    It is not right to say this graph negates inevitability of rebound, as per capita production peaked at the same time the graph started.

    The graph incorrectly represents cherry picked data.

  45. Hermit
    March 31st, 2013 at 10:04 | #45

    Around about now we could use some advice from aliens from another galaxy. On Earth we had perhaps a quarter billion years of carbon accumulation in shallow deposits the same time as the atmosphere became rich in oxygen. Very late on the scene one species worked out how to exploit the shallow carbon and the then-clean atmosphere. That species bred prolifically and convinced itself every member was entitled to use abundant energy from that happy coincidence of easily obtained chemical reactants and places to dump the waste products. The next part of the story is vague but probably didn’t end well.

    I think the likely change in government in Australia illustrates the task ahead. People have worked themselves into a lather over small restrictions on carbon burning, so much so they want the restrictions abandoned. Yet we know by mid century when today’s schoolkids are in their prime even the cheapest fossil fuels will be prohibitively expensive through depletion if nothing else. Are we wise enough to steer the least-worst path through this dilemma? Near term the indications are no.

  46. Phil L
    March 31st, 2013 at 10:41 | #46

    Totally agree with your comment, except that the species did not quite convinced itself that every member was entitled to use abundant energy. In fact, it only works because 1 billion or so members of that species are happy to have the other 6 billion on a lesser ration!

  47. Mel
    March 31st, 2013 at 11:01 | #47


    “So everything is cool is it?”

    I didn’t say or imply that. You appear to have a serious reading and comprehension deficit. Nope, everything is not cool. And as I keep saying, ocean acidification is AGW’s ugly twin sister. We have to keep her in mind as well.

  48. March 31st, 2013 at 11:29 | #48


    OK, I’ve looked into that.

    He talks about oil supply and liquid fuel alternatives and risk management.

    He doesn’t mention “the end of civilisation”, the most ‘alarmist’ thing I could find was a suggestion of ‘economic and social chaos’ if nothing is done to address the risks of falling worldwide net oil production. That seems obvious to me, are you suggesting it is alarmist to think that declining oil production rates (ie: less available next year than last year, etc..) would have no likely economic or social impacts, ceterus paribus?

    As an aside, the world consumes as much oil every single day as the volume of water that flows over Niagara falls in 8 hours. That’s an awful lot of oil.

  49. Ikonoclast
    March 31st, 2013 at 11:48 | #49


    We agree on ocean acidification. I just think you tend to minimise mean global temperature rise dangers somewhat.

  50. March 31st, 2013 at 19:16 | #50

    Anyone got any idea why the OPEC website has been offline for two weeks?

    OPEC production has fallen to about 30m bbd and they seem to be up against capacity rather than just fiddling with the ‘tap’ when they like. The $/oil dynamic is something I’m only vaguely grasping but I’m sure economists have put thought into that (especially the idea that we can’t really have “$500/bbl” oil – in today’s money – because at that price we wouldn’t have the $500).

  51. April 1st, 2013 at 02:43 | #51

    A dollar-to-dollar comparison of purchase prices of EV and IC cars is inaccurate, in the same way as a dollar-to-dollar comparison of the costs of renewable vs. fossil generating capacity. The running costs of the EV are much, much lower. The total cost of ownership is still higher, but by much less than appears at first sight. Renault have the right idea: with their latest offering in Europe (the Zoe), you buy the body and lease the battery, so the running costs look similar to the IC we are used to. The Zoe sells for €20,000 before subsidy (<€14,000 net in France), so it's only twice a comparable IC car.

  52. TerjeP
    April 1st, 2013 at 07:34 | #52

    As an aside, the world consumes as much oil every single day as the volume of water that flows over Niagara falls in 8 hours. That’s an awful lot of oil.

    There are a lot of people on the planet.

  53. April 1st, 2013 at 08:05 | #53


    Roughly 26% of that oil is consumed by the US alone.

    The next 29% is consumed by EU, China and Japan.

    The rest of the world shares the leftovers in very uneven measure.

  54. Hermit
    April 1st, 2013 at 08:18 | #54

    In recent days the West Texas Intermediate oil price has been nudging $100 a barrel with the Tapis price relevant to us around $115. At the height of the 2008 GFC WTI hit $147 leading some to speculate that for practical purposes $200 is the limit. Think retail petrol at $3/L here but a lower price than that has knocked the wind out of the EU economy.

    If this theory is correct we’ll never pay more than $3 a litre for fuel. The downside is that fuel may be effectively rationed e.g. by massive unemployment. I don’t think $60k electric cars will help outer suburb battlers so I think we may flirt with natural gas powered cars for a decade or two. Eventually that resource will go as well. Maybe there are just too many of us expecting high mobility.

  55. Ernestine Gross
    April 1st, 2013 at 09:00 | #55

    Happy birthday, John.

  56. April 1st, 2013 at 09:07 | #56


    I’m a big fan of free public transport. It has to be completely free – no ticketing, cash handling, enforcement etc.., and it has to be expanded as far as necessary to fill demand.

    Unfortunately, ideas like that stand no chance with our political system (dis)functioning as it currently is. Ever since Firestone, GM and Standard oil conspired, successfully, to destroy the US tram system and transition transport to oil/internal combustion (the “National City Lines” conspiracy) our governments have refused to address transport seriously.

    I don’t know if there is sufficient proof, but I’m fairly certain that the loss of Brisbane’s trams was an extension of that conspiracy (eg: the mysterious 1962 Paddington tram depot fire that destroyed most of the city’s trams in one hit – the City Council hadn’t insured the trams or the depot).

    Some “big oil” conspiracies are real, not just theories!

  57. Ernestine Gross
    April 1st, 2013 at 09:30 | #57

    As for the graphs of the p.c. data of oil consumption:

    Setting aside questions about the quality of the data, the graph is consistent with micro-economics. But it is not necessarily consistent with the ‘free market believe’ because the significant relative price change (oil price hike) in or around 1994 was brought about by OPEC. As such it provides a historical example of an administered price for ghg emissions leading to a reduction in p.c. emissions.

    The limitations of the entrenched habit of having ‘micro-economics’ and ‘macro-economics’ shows up again. What is the total oil consumption during this period?

    It is the total oil consumption which is relevant for peak oil. It seems to me only if one starts off with textbook micro-economics and the premise of a ‘free market’ could one possibly interpret the graph as being related to peak oil (marginal rates of production and marginal rates of substitution). But it was an administrative (collusion) relative price change not a ‘free market’ outcome.

    A time series of total oil consumption is, in one way or another related to the time series of oil consumption per capita and the time series of population growth. The following web-site contains a graphs of population growth for industrialised and developing countries. I can’t garantee the categories are comparable to the p.c. oil consumption graphs. On the contrary, since countries have differing development paths, the categories in both sets of graphs are likely to be wrong in some sense. But, as an indication of the importance of population growth, the web-site might suffice.


    It seems to me, a difficulty with the acceptability of the Kyoto protocoll lies in the dual aim of reducing global ghg emissions (an aggregate) but working with per capita emissions targets. I believe the latter was intended to assist developing countries in ‘catching up’ a bit – or to put it another way, not giving the industrialised countries a permanent advantage. Am I wrong is saying there is one concurrent target missing to make the scheme credible, namely a population growth target, conditional on which the per capital emission target is set? This is easier said than morally and politically supported

    In my reading, there is a postive message in the p.c. oil consumption graphs when combined with daily life experience. Our (OECD)standard of living hasn’t declined even though the p.c. consumption in developing countries has increased a little bit. I expect something similar with ghg emission pricing.

  58. Ernestine Gross
    April 1st, 2013 at 09:35 | #58

    Fatal error correction please: The oil price hike took place in or around 1974 and not 1994. Sincere apologies.

    I can’t figure out why the error jumps in my face only after I submit!

  59. Fran Barlow
    April 1st, 2013 at 11:03 | #59


    I’m a big fan of free public transport. It has to be completely free – no ticketing, cash handling, enforcement etc.., and it has to be expanded as far as necessary to fill demand.

    I used to favour that, but I’m now disinclined. To make the case, one has to argue that public transport has a greater claim on community support than every other service that is truncated due to capital or recurrent cost. I doubt that is so. I’m also not sure why public transport commuters, who tend to be better off than the un(der)employed ought to get this subsidy. Yes, there is a collection cost, but it’s fairly trifling in relation to revenue.

    You could make a case for easier access to concessional or free travel for those on low incomes.

    I also don’t agree that the cost of public transport deters many people from using it. At peak times especially, it’s often standing room only. A much more potent deterrent is unavailability of service, poor connectivity or lack of comfort (being on a really crowded bus or train is tough at the end of a long day).

    Let’s make public transport better value for money by having it more available and less crowded and better matched to need. As long as it ticks these boxes, paying for it is entirely reasonable. I’d happily pay 20% or even 50% more depending on how well it did in these respects. As these benefits were delivered, you could progressively raise the cost of private road usage to fund improvements to the system and reconfiguration of cities to make public transport easier and lower cost to deliver at quality.

  60. Hal9000
    April 1st, 2013 at 11:30 | #60

    @Fran Barlow

    I also don’t agree that the cost of public transport deters many people from using it.

    Perhaps you should come to Brisbane, Fran. The cost of a fare to the CBD from any of the outer suburbs and surrounding local government areas where over half the population lives is a minimum of $7.80 each way, per person. Not much less, btw, for inner suburbs. For a couple, or a couple with commuting children, the cost difference between public transport and car use with paid all day parking is marginal or negative.

    Users of public transport in Brisbane resort to amazing stratagems to reduce the cost and navigate the fare structure. For example, Campbell Newman fulfilled his election promise to reintroduce the ‘pay for no more than ten trips per week’ system that went out when they brought in Go-Card, the Qld equivalent of Myki (he then jacked up fares a couple of months later to pay for it). So thousands of city workers take useless trips for a couple of blocks around the city each week to build up journey credits against their extortionate commuter fares. In my workplace of a dozen, two colleagues do this every week and two more do it at least once a month.

  61. Hal9000
    April 1st, 2013 at 11:31 | #61

    Oops. Meant to put Fran’s line up top in blockquotes.

  62. Mr. Eyesore
    April 1st, 2013 at 12:01 | #62

    Supply-and-demand wasn’t the main cause of the spike in the oil price in 2008. It was paper oil. (Scroll down to ‘Bubble #4: $4 a gallon’.)

  63. April 1st, 2013 at 12:08 | #63

    @Fran Barlow

    The cost: Vehicles, maintenance, wages, fuel/electricity. The ‘Go-Card’ system cost something like $50m to buy and install. That expense produces no revenue. Finding the break down of expense and revenue is very difficult so I’m stuck with generalisations.

    If it was totally free there would be no costs for ticketing, cash handling, enforcement and associated admin. There would be increased efficiency through speed loading/unloading passengers.

    In the 1940s Brisbane moved something like 160million passenger trips pa. The population has doubled and usage roughly halved.

    The direct savings: Road construction/maintenance, pollution/accident health costs.

    Benefits: decreased road congestion for car-users/commercial vehicles etc.. & therefore faster trips, increased amenity, financial benefit to businesses by delivering customers and staff, less pollution, great for tourism.

    If it were free I’d bet the “subsidy” would be tiny compared to the indirect subsidies going to the road-users/car related industries.

    In Brisbane every time there is a big sport event public transport is free for ticketholders. They seem to be able to do it for the corporate big business of sport, but not for the rest of us the rest of the time.

    I’d really like to see a genuinely transparent and independent economic analysis taking all of the factors into account. I still think totally free public transport would be a net benefit to society.

  64. Fran Barlow
    April 1st, 2013 at 12:19 | #64


    I suppose I was thinking mainly of Sydney. You can live 40kms from the centre of the city and still get unlimited train travel to and from the city for a week for $40. Even Penrith (50kms) is $40. I’m not sure about the buses though — they are a bit more expensive.

    Brisbane does sound a horror on your description. Acknowledging that is not the same as arguing for free public transport of course.

  65. Fran Barlow
    April 1st, 2013 at 12:24 | #65


    I still think totally free public transport would be a net benefit to society.

    Possibly, but would it provide as much net benefit as subsidised means-tested public (or semi-public) housing? Better public schools? Better services to children?

    These are questions that don’t admit easy answers.

  66. April 1st, 2013 at 13:19 | #66

    Word War II provides a dramatic example of how oil use can be rapidly cut while not only maintaining but increasing industrial production. When I mention this fact it is often countered by the Creampuff Theory of Human Development which states that in our modern age even a mild inconvenience such as carpooling can and will destroy human civilization in a way Nazi Germany and Imperial Japan could not.

  67. April 1st, 2013 at 13:25 | #67

    @Fran Barlow

    I don’t see it as ‘either/or’. Universal free healthcare, free education and public housing are all non-negotiable in my book.

    Hal: Some free-market entrepreneur could charge city workers a fee to collect their go-cards in the morning, make 10 trips up to Spring Hill or on the train between Central and Roma St and back and have them back in the office by 5pm!

    Say $10/card, you could probably work the timetable to knock off 10 trips/hr = 7 cards a day = $350/wk. I imagine there are very stiff penalties for doing that.

  68. Mel
    April 1st, 2013 at 13:42 | #68

    There is no such thing as a free lunch. Milton Friedman was wrong about many things but he was right about that.

  69. TerjeP
    April 1st, 2013 at 15:33 | #69

    Ever noticed that the suburbs with train stations are the ones with expensive housing. The well off buy their way to the head of the public transport queue. Which makes the case for a subsidy as some sort of income redistribution measure kind of weak.

  70. Jim Rose
    April 1st, 2013 at 15:41 | #70

    a transport economist mate told me that buses work much better in winning buiness when they are on time and no more than ten minutes apart.

  71. Fran Barlow
    April 1st, 2013 at 15:47 | #71


    Ever noticed that the suburbs with train stations are the ones with expensive housing.

    There is something to this, though it’s not clear to me that the land at Rooty Hill (which has a station) is a lot more expensive than the land at nearby Whalan or Dean Park. I’d lso be surprised if it turned out that buying a house at Longueville or Greenwich or Cammeray or Crows Nest were cheaper than buying the same house at Artarmon or St Leonards or North Sydney notwithstanding that the latter have stations.

    Doubtless a station (especially one that has the express service to the city stop at it) will, ceteris paribus, attract more buyers than one that hasn’t, but one shouldn’t overstate it.

  72. TerjeP
    April 1st, 2013 at 16:36 | #72

    Jim – if they were ten minutes apart I wouldn’t much care if they were late on occasion.

    On time running as a KPI can create some perverse incentives where drivers with buses that are not quite full skip stops with waiting passengers to make up time.

  73. Fran Barlow
    April 1st, 2013 at 16:53 | #73


    On time running as a KPI can create some perverse incentives where drivers with buses that are not quite full skip stops with waiting passengers to make up time.

    Speaking as someone who drove a bus in 1980-81 (Atlanteans, Leyland Leopards, Tigers, and the early Mercedes) for the then UTA in Sydney, the other thing that occurs is a tendency to cut corners at embarkation, so that you take off before people who have just got on are secure in the bus, which, particularly in the case of our older folk or someone who has had a couple of drinks and doing the right thing, is not ideal. You can get a little heavier on the peddle and toss the bus about in an attempt to make up time and this also reduces passenger comfort and can prejudice safety.

    The old 417 route from the Quay to Central was pretty much impossible to timetable because it was entirely dependent on how Pitt St was flowing.

  74. Jim Rose
    April 1st, 2013 at 17:03 | #74

    the trains were on time in Tokyo, and stopped for about ten seconds, and ran 180% to capacity. The buses were terrible because of the road traffic.

  75. rog
    April 1st, 2013 at 17:13 | #75
  76. TerjeP
    April 1st, 2013 at 18:14 | #76

    Rog – I bought a quarter acre in Sydney about seven minutes walk from the railway station. If I had bought a similar lot in the area at a 30 minute walk from the station I would have saved quite a bit of money. It seems pretty consistent to me that proximity to a railway means higher land value in Sydney. All else being equal.

  77. April 1st, 2013 at 23:02 | #77


    Strictly speaking – of course there is no such thing as a free lunch.

    The fluoride in our drinking water, for example, costs Queenslanders about $40 million pa. But it is “free” in the sense that we all get it from the tax-payer funded base upon which all public services are provided whether we need it personally or not.

    People are selective in their views of what should/could be “free” and what absolutely cannot be “free” but must be funded according to strict “market” principles.

  78. Fran Barlow
    April 1st, 2013 at 23:48 | #78


    People are selective in their views of what should/could be “free” and what absolutely cannot be “free” but must be funded according to strict “market” principles.

    And speaking as a socialist, I’d say that’s a pretty good thing.

  79. TerjeP
    April 2nd, 2013 at 05:48 | #79

    Megan – isn’t the cost of fluoride built into the utility price paid for water?

  80. Ikonoclast
    April 2nd, 2013 at 06:15 | #80


    Not true, all capitalists get free lunches. The workers do the work and the capitalist gets the money.

  81. April 2nd, 2013 at 07:49 | #81


    I’d have to look into the way the dosing is paid for and whether that cost is quarantined.

    Under the ‘Fluoridation Capital Assistance Program’ the actual capital costs of about $72.65million came straight out of the free-lunch-box. If you consider drinking water should strictly be user pays then this fails the test, the government paid for it.

    Of course, I argue that the government could also pay for 100% free public transport, for the reasons I’ve given before.

  82. Ikonoclast
    April 2nd, 2013 at 10:19 | #82


    LOL. In Brisbane, being closer (walking distance) to many train stations means a higher probability of your house being robbed. Train-riding house break-in thieves you see. I deliberately live a long way from train stations for that very reason.

  83. Mel
    April 2nd, 2013 at 10:45 | #83


    Water fluoridation is one of the most cost-effective public health programs available. The public cost of fluoridation is only a tiny fraction private cost of dental work caused by not fluoridating. From the US CDC:

    ” In fact, the economic analysis [of fluoridated water] found that for larger communities of more than 20,000 people where it costs about 50 cents per person to fluoridate the water, every $1 invested in this preventive measure yields approximately $38 savings in dental treatment costs.”


    “Not true, all capitalists get free lunches. The workers do the work and the capitalist gets the money.”

    False. If workers self-organised into collectives to produce the goods we want at competitive prices, capitalists would be redundant. But they don’t. Hence capitalists provide a vital service for which they are entitled to a fee.

    Anyway, PrQ will get cross if we continue to disrupt his thread with OT remarks. Anymore discussion of these topics should be in the sandpit.

  84. stephen
    April 2nd, 2013 at 11:16 | #84

    To try to get back on topic, I would have thought that the key point here is that in a period when the per capita GDP of the most populous countries in the developing world has at least doubled (in some countries quadrupled) their per capita oil use has not. At the same time, OECD countries have been adjusting – suggesting that as John says there is a convergence. Not hard to see why convergence happens. Prices are leading to takeup of alternatives in both sets of economies, but the OECD is coming off a higher base and a much more entrenched reliance on oil. However the trend is good.

    Which indicates a couple of things:

    1) poor countries coming out of poverty need not be at the cost of the global climate. We had better hope so – because it both will and should happen.

    2) price signals change consumption patterns – if they work for oil, they ought to work for other fuels.

  85. Hermit
    April 2nd, 2013 at 12:16 | #85

    I’m troubled by the rationale given for coal exports to developing countries, namely to help them get ahead. That apparently clears our conscience about taking the money while we tell ourselves we are rapidly weaning ourselves off coal. If we’re so technologically superior and morally upright we should decline to export coal but show these countries the alternatives instead.

    The other problem with coal exports is emissions by proxy. Thus Australia can export iron ore and coking coal or alumina and thermal coal to Asia then re-import the products from our own ingredients and fuels. However we’re off the hook for the emissions. I think that makes us carbon sleazebags.

  86. TerjeP
    April 2nd, 2013 at 12:41 | #86

    False. If workers self-organised into collectives to produce the goods we want at competitive prices, capitalists would be redundant. But they don’t. Hence capitalists provide a vital service for which they are entitled to a fee.

    Amazing that this needs explaining.

  87. may
    April 3rd, 2013 at 13:00 | #87

    does the graph count the oil used for petrochemical products such as plastics and fertilisers?

  88. may
    April 3rd, 2013 at 13:10 | #88

    TerjeP :

    False. If workers self-organised into collectives to produce the goods we want at competitive prices, capitalists would be redundant. But they don’t. Hence capitalists provide a vital service for which they are entitled to a fee.

    Amazing that this needs explaining.

    the anomalies extant to the first can be illustrated by the old standby Mondragon.
    how it has managed to survive in the face of implacable capitalist hostility?

    it’s not the exchange for services rendered that is the problem.

    it is the scale of return on the exchange.

    not that i would hope you find yourself in the desperate situation of being in a completely free and unregulated market where your diamonds aren’t worth their weight in potatoes.

    never happened?
    never could happen?

  89. Jarrah
    April 7th, 2013 at 22:30 | #89

    “how it has managed to survive in the face of implacable capitalist hostility?”

    The question should be, why hasn’t its model been replicated more widely? Since it’s so successful and all.

  90. Jim Rose
    April 9th, 2013 at 21:47 | #90

    TerjeP, if cooperative ownership is so efficient, why are there so few cooperatives?

    Workers’ cooperatives should be able to slowly under cut other firms on price because they do not have to pay a profit to the capitalists.

    Building societies, credit unions and some life insurance companies were mutually owned by their customers, but they fell out of favour because of a lack of competitiveness.

    Cooperatives are not economically viable because of intrinsic difficulties of entrepreneurship and management and most workers prefer working in capitalist firms for a wage rather than waiting for the co-op to start-up and hopefully break-even.

    Originally, most kibbutzim followed strict socialist policies forbidding private property; they also required near-total equality of income regardless of differences in productivity, and in some cases even abandoned the specialisation of labour. anyone who wanted to leave could only leave with the shirts on the back.

    Kibbutzim are communities whose aim is equal-sharing. They are expected to unravel because of moral hazard and adverse selection. Other organisations subject to adverse selection and moral hazard are professional partnerships, co-operatives, and labour-managed firms because they are all based on revenue sharing.

    Kibbutzim have persisted for most of the twentieth century and are one of the largest communal movements in history. 40% are still run on communist principles.

    The founders of kibbutzim were socialist idealists wanting to create a new human being.

    Ran Abramitzky is writing a book The Mystery of the Kibbutz: How Socialism Succeeded See http://www.stanford.edu/~ranabr/Abramitzky_book_presentation.pdf

    He found that high-ability individuals more likely to leave. The brain drain would be worse if kibbutzim didn’t make it so costly to exit. is this a familiar theme of socialism? Kibbutzim also put prospective members through lengthy trial periods.

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