Another encouraging graph

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

90 thoughts on “Another encouraging graph

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

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

  5. @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.

    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).

  6. 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?

  7. 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.

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

  9. @TerjeP

    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.

  10. 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.

  11. 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.

  12. @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.

  13. @iain

    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.

  14. 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.

  15. 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.

  16. 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.

  17. @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.

  18. 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.

  19. 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.

  20. 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.

  21. 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?

  22. 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.

  23. 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.

  24. 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.

  25. @TerjeP

    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.

  26. 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.

  27. @Megan

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

  28. @Mel

    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.

  29. @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.

  30. 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.

  31. 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.

  32. 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.

  33. John
    “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 ?

  34. 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.

  35. 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.

  36. 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.

  37. @Hermit
    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!

  38. Ikonoclast:

    “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.

  39. @TerjeP

    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.

  40. @Mel

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

  41. 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).

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