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Page added on April 25, 2012

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US Oil Consumption and Oil Prices

US Oil Consumption and Oil Prices thumbnail

The chart above shows weekly US oil consumption since 2000 as the blue curve (the EIA weekly product supplied series).  I have added a 13 week centered moving average (red) to cut the noise a bit.  Both of these are on the left scale in millions of barrels/day (not zero-scaled to better show changes).  Then the green curve is Brent oil price (right scale).

There’s a couple of points worth making here.  I have a very rough rule of thumb — now that we are on the oil plateau — that if US consumption is increasing, oil prices are below the required level.  US consumption must decrease overall to accomodate rising consumption in the developing world, and stagnant supply.  Since the beginning of 2011, oil consumption has been decreasing, suggesting that oil prices are in roughly the right range.

However, it’s also worth noting that the price required to make consumption decline has increased over time.  In 2006-2007, prices of around $70 were enough to make oil consumption flatten and then decline. However, in late 2009 and 2010, similar prices obtained while consumption continued to rise.  It took the rise to over $100 in spring 2011 to get consumption to start to decline again.

Thus it seems likely that at some point, higher prices will be required to get US consumption to continue to decline.  As usual, timing is hard to determine.

6 Comments on "US Oil Consumption and Oil Prices"

  1. SOS on Wed, 25th Apr 2012 6:46 pm 

    Problem is there is not stagnant supply. The amercian governement is doing its best to see that supplies drop but with the new technologies there is just too many opportunities to produce even with 97% of federal lands closed to exploration.

  2. BillT on Thu, 26th Apr 2012 12:46 am 

    World supplies have remained much the same but Chindia now uses at least 7% more oil than before and that oil is coming from the drop in consumption by Western countries due to the economic turmoil and the constant drop in consumer’s wages. Yes, higher prices are coming to Amerika, but only because Chindia is willing to pay more for their energy because they are more efficient at using it to produce real wealth*. Amerikans just waste most of their oil and produce nothing but pollution.

    *And because they see their dollars turning into Charmin and want to get rid of them.

  3. Arthur on Thu, 26th Apr 2012 10:22 am 

    The declining use of oil in the US is a clear indicator that there is no economic recovery in the US. Now, a real peaker could not care less about a recovery, that can only be shortlived, but instead should contempate how society could proactively be wind down towards a sustainable level.

  4. BillT on Thu, 26th Apr 2012 2:38 pm 

    Arthur, I don’t have as much faith in the possibility of ‘winding down’ logically or peacefully. The elite are all old men who could care less about what they leave their grand kids. Most will be dead in 20 years or less.

    There is a much better chance that we will do the unthinkable and unleash the nukes we have been sitting on for 67 years. The chance for a world government is not possible now, but the conspiracy is trying hard to accomplish it before shortages make it impossible.

    Am I wrong? I hope I am wrong about the nukes, for my grand kids and their grand kids, but it will be a dangerous few decades until that point.

  5. Kenz300 on Thu, 26th Apr 2012 7:22 pm 

    Oil consumption is declining in the US while it is growing in China and India.
    The global economy was built on cheap oil. Every country needs to develop a plan to balance their population with resources of food, water, oil, energy and jobs.

  6. SOS on Thu, 26th Apr 2012 11:22 pm 

    Its also woth noting that energy production on federally owned lands has dropped by 30% or so since obama took office. The chart clearly shows that. Had our country embraced its gifts of abudnat energy that curve would look much different and so would the prices we are all paying. Peak energy is a political not a physical contraint.

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