Another encouraging graph

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

45-Per-capita-oil-use-in-residential-commercial-agriculture-1971-2009-OPEC-WOO2012

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

90 thoughts on “Another encouraging graph

  1. 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.

  2. @Mel

    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.

  3. @Megan

    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.

  4. @TerjeP

    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.

  5. @TerjeP

    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.

  6. Megan:

    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.”

    Ikon:

    “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.

  7. 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.

  8. 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.

  9. 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.

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

  11. 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?

  12. @may
    “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.

  13. 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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