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Page added on January 24, 2014
The other side of the peak: Italy’s collapse of oil and gas consumption
All the data in this post are from BP statistical review up to 2012, updated to 2013 from various sources.
Sometimes, peak oil looks like an intellectual game that people keep playing by arguing whether it has arrived or not. But the point with oil is not how much of it is produced, somewhere, but how much you can afford to use. And, for Italy, the peak of consumption has already arrived, as you can see in the figure above. It is impressive: consumption went down of more than 30% in less than 10 years. Today we are back to the levels of 1967. And, in 1967, Italy’s population was around 50 million people, some ten million less than today. We really have reached the other side of the peak and we don’t see the bottom of the descent.
So, why that? Simple: the reduction in oil consumption is directly linked to oil prices, as you can see here:
If you like to plot prices versus production, here are the results:
In short, the Italian economy can afford to grow its oil consumption when oil costs less than about 20 dollars per barrel (in today’s dollars), it remains stable as long as oil is at less than ca. 40 dollars per barrel and it collapses when oil prices go above that level.
I am sure that now you are wondering about how’s life in Italy with one third of oil consumption gone. You would expect empty roads, deserted towns, and a general post-holocaust atmosphere. Well, no; that’s not the case. I can tell you that it is hard to see big changes in everyday life in Italy. In particular, at rush hour in town, the streets look jammed with cars as ever. From what I hear from friends and acquaintances, the situation is the same for all large towns in Italy.
But arriving to the conclusion that there are no problems in Italy would mean to make the same mistake that our former prime minister made a few years ago, when he said that Italy had no economic problems because “restaurants are full”. Restaurants are not the economy and city streets at rush hour are not the country’s transportation system. And there is no doubt that transportation is in trouble if we measure it in terms of km traveled. Here are the data (courtesy of Massimo de Carlo at “Mondo Elettrico“). The blue curve is for light vehicles, mainly cars, violet is for trucks, and red is all vehicles. Data from AISCAT, updated to 2012.
We see that the transportation system managed to cope – more or less – with the reduced oil supply until about 2008-2010. The peak in km traveled came later than the peak in oil consumption and the decline has been less pronounced: less than 10% for cars and about 15% for trucks. So, it makes sense that the loss of traffic is not clearly noticeable in towns, especially during rush hours. People have probably cut the non strictly necessary travels and it seems that they are still able to use their cars for everyday transportation. They could do that in large part by switching their cars to natural gas and liquefied petroleum gas as fuels. In part also by switching to more efficient cars, although small and hybrid cars in Italy seem to be vastly outnumbered by SUVs.
So, it seems that the main factor in counteracting the decline in oil consumption, up to a certain point, has been an increase in natural gas consumption. That has been a historical trend not just in terms of vehicle fuels, but for a variety of applications. You can see the story in the following figure:
Around 2006, gas consumption peaked and generated “peak hydrocarbons” in Italy. Afterward, consumption has been rapidly declining; much faster than growth. It is a behavior that I termed the “Seneca Collapse“. Italy may have the dubious honor of being the first major Western economy to experience this kind of collapse in modern times.
So, what’s going to happen, now, on this side of the peak? Difficult to say, but if the Seneca collapse continues, in the coming years it is unlikely that we’ll be still seeing traffic jams at rush hour (and restaurants full of people).
Cassandra’s legacy by Ugo Bardi
8 Comments on "The other side of the peak: Italy’s collapse of oil and gas consumption"
DC on Fri, 24th Jan 2014 6:06 am
He raises a good point about how people look at saturated roadways and, in his case, ‘restaurants’ and conclude ‘all is well’. I have seen this kind of economic analysis close hand. My old man concludes the same thing. He has said to me on a few occasions that the heavy traffic clearly indicted things are ‘active'(ie good). No amount of explaining cars-only transportation, induced demand and other factors seemed to convince him what he was looking at, was basically a mirage.
Like Professor Bardi, I tired to explain to the old man that car traffic nor having to make a reservation at the local golf clubs restaurant on the weekend prove anything. The ‘official’ unemployment rate is 7%, which means its probably well over 10% at a minimum. Even that doesn’t tell the whole story. The ‘city’ is largely a low wage, service job mecca and in the area as a whole, somewhere between 20-30% of the total population receive govt assistance in one form or another.
deedl on Fri, 24th Jan 2014 7:31 am
The reduce in oil consumption is mainly explained by reducing oil consumption for electricity. As you can see here (http://www.orkii.com/italy/electricity-production-oil-sources-percent-of-total) in italy oil was a major contributor to electricity. The oil was mainly replaced by natural gas and in the last years also by renewables (renewable electrictiy is now roughly at 20%). Additionally electricty production is also down a bit due to economic inactivity (http://www.indexmundi.com/facts/italy/electricity-production).
So this article lacks some research since italy is a special case where oil consumption was not reduced to transportation. That is the reason why streets are still full of cars. Obviously 10-15% recution in miles can not explain 30% reduction in fuel use. The other 15-20% (the major part!) are explained by the electricity sector.
This is by the way a nice example how PV (italy installed a lot during the laste years) can indirectly mitigate expensive oil to some extent. Oil power plants are often used as peak load plants because oil is expensive but those plants can (compared to coal or nuclear) quickly be ramped up or down. Since peak demand usually is at noon or early afternoon when PV has is max production, PV offsets the need for peakload plants. So you can free peakload fuels such as oil and gas for the transportation sector.
TGVictor on Fri, 24th Jan 2014 10:20 am
Are they using less energy – or are they importing it more now in the form of electricity from the E.U. – i.e. France.
Davy, Hermann, MO on Fri, 24th Jan 2014 11:14 am
My girlfriend is Italian so I spend time over there. She is from the Alpine region. I ususally gain weight from eating too much good cheese when I go there.
The Italians for all their faults do have a great post growth culture. I was impressed in these mountain areas how people cut grass by hand gather wood by hand, and make cheese products the old way. They have land cooperatives. They care for their land in the old ways. Lots of “Old Ways” stuff. That is what we need to rediscover here in the US. There are some hobby farmers and ranchers returning to the land. We need to keep the old ways of managing food, clothing, and shelter going. It is not yet economic because of things like Walmart but it is resilient activity
Davy, Hermann, MO on Fri, 24th Jan 2014 11:17 am
BTW, the grass they cut is for their cows that produce their cheese. It is a high quality grass they stack by hand in quaint picturesque barns. Many of these barns are old but quite functional. In other words the system is low tech and uses little fossil fuels. The women are hot too cause they work out in the fields instead of laying on the couch.
rollin on Fri, 24th Jan 2014 12:41 pm
So Italy is a really intensive oil use country. It currently uses half the oil/capita that the US does but only has one tenth the road length of the US. 86% of the Italian transport energy is road use.
According to Eurostat, 1990 to 2004, road energy use increased by 29%, air transport use increased by 97% and railways by 22%.
I couldn’t find bunker fuel and marine transport statistics.
Kenz300 on Fri, 24th Jan 2014 5:01 pm
Buy a bicycle, walk or use mass transit.
It is cheaper and better for your health.
Cities need to become more people centered and less auto centered.
Northwest Resident on Fri, 24th Jan 2014 8:42 pm
Davy — I’m with you on “returning to the old ways.” I don’t know if it will help me and my wife/son survive “collapse”, but I am totally, fully, urgently committed to setting up to grow ALL or at least most of my own food — the old fashioned way. It has taken a couple of years to build up to it, but this summer I will be doing my first full-scale implementation. I’ve read tons of books, articles, how-to’s and have gathered and put together what I think will end up being at least a very good first try. My guiding “bible” has been a best-selling book titled: “Mini Farming On 1/4 Acre”.
http://www.amazon.com/Mini-Farming-Self-Sufficiency-Brett-Markham/dp/1602399840
I can’t wait to put everything I’ve learned into action. Whether I go down in collapse or survive, I feel like I am doing my part to “lead humanity” back to the fundamentals of living in harmony with Mother Nature. Sometimes, surviving and doing the “right thing” are mutually complimentary!!