Tuesday, June 28, 2011

Peak Oil is not Synchronous


This morning, I took the oil consumption page of the BP spreadsheet, and applied a mechanical test to each country: was 2010 the highest year of consumption over the range 1990-2010?  If this is true, let's call the country an "advancer", and if not, let's call it a "decliner".  Here are all the advancers:


On this, and all the other graphs in this post, you can click to get a large version in a new window.  You can see that the bulk of advancers are rapidly growing Asian or Middle Eastern countries, with a few other emerging markets from around the world thrown in.  The only developed countries on this list are Norway and Australia - both big resource exporters.  These countries in the aggregate account for a little over a third of global consumption.

To see the individual countries better, here's the same data as a line graph, instead of a stacked area graph:


China really stands out.  If we blow up the vertical scale so that we only go up to 4mbd (and thus exclude China), we get this:


Notice how few had significant contraction due to the great recession.  Looking at it yet another way, here's the ten year average growth rate plotted against 2010 consumption:


China is far and away the most important story, then Saudi Arabia, India, Brazil, and Russia.  These countries have not reached their peak oil consumption, and probably won't for some years to come.

If we look at the countries where 2010 was not the highest consumption, in the aggregate  we get this:


You'll really need to click for the big version to read the legend, but basically most of the world's developed countries are there, along with a few badly governed places like Mexico and Iran.  The group as a whole peaked in about 2005.

To get a clearer sense of what this means, it's interesting to take the top ten largest decliners (by 2010 consumption) and plot their consumption post their respective peaks, as a percentage of that peak:


Two countries at least, South Korea and Canada, are likely on the list for temporary reasons and may yet exceed their former peaks.  However, most of the rest have probably seen their greatest oil consumption and will need to further contract to make room for the still growing oil consumers.

The earliest to peak was Italy in 1995, with Japan and Germany not far behind.  US consumption peaked in 2005.  Obviously the story is a little different in each case.  In Germany, this is mainly about getting more oil efficient, whereas in Japan there's a strong component of economic stagnation.  In the US, oil consumption only contracted on account of the 2005-2008 price spike and then the recent recession (but I don't see how it can now exceed the 2005 peak given the overall supply and demand picture).

There are a few points worth emphasizing:
  • Peak oil consumption arrives on a rolling basis at different times around the world.  It very likely arrived in some places as early as 1995, and some countries will probably still be growing their oil consumption in 2020 or later.  So it's a multi-decadal event that we are somewhere in the middle of.
  • 15 years after their oil consumption peaked, places like Italy, Germany, and Japan are pleasant and civilized countries to live in.  So while peak oil certainly means higher oil prices, more economic weakness, and more stress on many individuals, it doesn't have to mean the end of life as we know it.

10 comments:

John Weber said...

Your comment on Italy, Germany and Japan's peak consumption does not take into account energy embedded in materials both for further manufacturing and finished goods brought into the country. This is a global, complex system.

KLR said...

It depends on what nations are cutting back on, your average citizen isn't going to notice a material difference in their quality of life when switching from fuel oil to NG for their boiler. This goes double or treble for things like industrial use of pentanes plus or burning residual fuel oil for power generation; if those applications are simply transferred to developing nations with less stringent environmental regulations you just have globalization in action.

As an example Germany in 2008 consumed 58.86 kb/d less jet fuel than their average 1984-2008. But they consumed 53.93 kb/d more diesel, negating any gains.

Here's my spread sheet of International EIA Data Petroleum (xls format). Sheets are included with detailed consumption data for France/UK/Germany/Japan/KSA/Egypt, which is a bit of a chore to compile; hope this is of use.

There was an excellent study of demand patterns worldwide, issued a couple of years ago; I neglected to bookmark it, or bookmarked it in some non-obvious fashion; will try and hunt that down later today. It was a woman and man, issued by some NY university I believe.

KLR said...

Ah, found my paper:
World oil demand’s shift toward faster growing
and less price-responsive products and regions
(pdf),
by Joyce M. Dargay and Dermot Gately, published February 2010.

Abstract
Using data for 1971-2008, we estimate the effects of changes in price and income on world oil demand, disaggregated by product – transport oil, fuel oil (residual and heating oil), and other oil – for six groups of countries. Most of the demand reductions since 1973-74 were due to fuelswitching away from fuel oil, especially in the OECD; in addition, the collapse of the Former Soviet Union (FSU) reduced their oil consumption substantially. Demand for transport and other oil was much less price-responsive, and has grown almost as rapidly as income, especially outside the OECD and FSU. World oil demand has shifted toward products and regions that are
faster growing and less price-responsive. In contrast to projections to 2030 of declining percapita demand for the world as a whole – by the U.S. Department of Energy (DOE), International Energy Agency (IEA) and OPEC – we project modest growth. Our projections for total world demand in 2030 are at least 20% higher than projections by those three institutions, using similar assumptions about income growth and oil prices, because we project rest-of-world growth that is consistent with historical patterns, in contrast to the dramatic slowdowns which
they project.

Emil said...

Stuart, you simply can't make an analogy between an individual country like Germany which has already peaked and the entire world.

Germany may have already peaked but their economy is export-based and exports need relatively cheap energy, mainly oil, prices to grow.

I do like your tendancy to view complex issues from the other side and make careful analysis like you just did(I'm no fan of the CAPS-doomers), but knee-jerk optimism will not be sufficient either, especially comparing (very small) apples like country-by-country peaks and huge oranges like a global peak event(however drawn out that event may be).

FYI, I'm in the moderate camp as well but surely this embarrasing post must be placed in the same category as your 'Iraq Can Prolong The Peak By Ten Years And Produce 10 mb/d'(no matter how many caveats you placed there, the story still stood).

Stuart Staniford said...

Emil:

:-) FWIW, I remain obdurately unembarrassed by the Iraq post. I still think it's entirely within the envelope of reasonably likely outcomes that Iraq will produce 10mbd+ and delay peak oil by a decade. I think it's unlikely they'll hit that level in seven years, and also entirely possible they'll fail (both points I made at the time).

Your point about this post (and John Weber's similar point above) I hope to explore in a future piece.

James said...

I think the Iraq post is the best post I have read in years on a Peak Oil related subject. I see the situation a bit differently than Stuart (I think Stuart is perhaps underestimating the role al-Sadr will play and not entirely taking into account the fact the the insurgents have every reason to bide their time until the scheduled US withdraw happens) - but that does not change the fact that Stuart raised and so capably analyzed a factor that (as far as I could see) nobody else was looking at.

Iraq Post = Brilliant

Justin said...

Stuart: Given that Japan is the post growth poster child and a harbinger of things to come, whether it is a "pleasant and civilised country to live in" deserves to be looked at a bit more closely.

After having lived there on and off for 30 years, Japan is certainly 'a pleasant and civilised country to live in' for the majority of people, particularly if you are middle class and live in Tokyo. But for a lot of Japanese people, circumstances are somewhat different. Many prefectures are seeing severe decline, with outright poverty showing through in many cases.

You should read through some of Richard Hendy's posts on Spike Japan to get a better feel for how a post growth society starts to fray at the edges:

http://spikejapan.wordpress.com/

Stuart Staniford said...

Justin - that's a fascinating link.

Tommy W said...

In the last ten years there has been a major shift in production, from the Europe (and North America) to Asia (China). Anything I buy today in Sweden is made in China or has a chinese copy that is much cheaper. My thesis is then that the decline of oil in Europe that is seen in your graph is simply shifted to Asia. This shift means no impact what so ever for the people of Europe (and North America), just that the goods you buy are cheaper. Well there is a risk of unemplyment, but that is not a major problem in Sweden and Germany as of now. Can you do some type of analysis of this thesis?

James said...

Another consideration when looking at the two countries mentioned, China and Germany, is the relative energy content/value of the imports/exports.

Germany exports tend towards high intellectual value content (engineering, machining, etc.) products.

China's products tend towards a higher ratio of resource intensive products (energy, steel, plastics, etc.) which are compensated by matching low labor costs, though these have been rising.