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Page added on December 1, 2019

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Why Oil Demand Won’t Follow Coal’s Death Spiral

Consumption

After a steady rise that lasted nearly 50 years, U.S. coal consumption peaked about a decade ago. Since the peak in 2007, coal consumption in the U.S. has fallen an astounding 44%.

There are two primary reasons behind coal’s death spiral. Both were aided by legislation aimed at reducing carbon dioxide emissions from power plants.

The first was that the shale gas boom in the U.S. unleashed massive new supplies of cheap natural gas. This made it economical for power plants to switch from coal to natural gas. Power produced from natural gas has lower associated carbon dioxide emissions.

The second was tremendous growth in the availability of cheap renewables like wind and solar power. As the price of these renewables declined, they grew exponentially. Since 2007, consumption of renewable power in the U.S. has more than quadrupled. Consumption of renewable power in the U.S. rose by 349 terawatt-hours (TWh) from 2007 to 2018. Over that same span, power from natural gas increased by 696 TWh.

The Impact on Carbon Dioxide Emissions

The decline of coal has had a big impact on U.S. carbon dioxide emissions. Since coal’s peak demand year of 2007, carbon dioxide emissions in the U.S. have fallen by 716 million metric tons. This is by far the largest decline of any country.

For reference, the 2nd leading country, the U.K., decreased carbon dioxide emissions by 176 million metric tons over that time span. At the same time, global emissions increased by 3.5 billion metric tons. The Asia Pacific region’s 4.0 billion metric ton increase in carbon dioxide emissions was partially offset by declines primarily in the U.S. and EU.

There are those who have suggested that oil will follow this pattern, and that oil’s decline will soon be at hand. The electrification of transportation is primarily expected to cause this decline.

I disagree.

Oil Isn’t Like Coal

First, while I do agree that electric vehicle (EV) growth will remain robust for many years, the turnover of the transportation fleet is a slow process. Many power plants were in a position to rapidly switch from coal to natural gas as legislation and economics made the switch appealing. They didn’t have to wait for the coal-fired plants to reach the end of their useful life. If they had, the transition would have been a much slower process.

We can look to a couple of examples to highlight the differences between oil and coal. Norway leads the world in the penetration of EVs. From 2009, Norway grew EV sales by triple digits for seven years. EV market penetration reached 5% in Norway in December 2016, and 10% less than two years later in October 2018. This is five times the new vehicle market share of EVs in the U.S.

But Norway’s oil demand has been slow to respond. According to the 2019 BP Statistical Review of World Energy, Norway’s oil consumption has actually increased over the past decade. In 2018, Norway consumed 234,000 barrels per day (BPD), 5% more than in 2017 and the highest annual consumption number on record.

The story is similar in the largest EV market in the U.S. California’s EV market share reached 4.8% in 2017, and surged to 7.8% in 2018. But data from the Energy Information Administration (EIA) shows that California’s oil consumption has risen each year since 2012.

The California Department of Tax and Fee Administration (CDTFA) did show a 0.4% decline in Net Taxable Gasoline gallons in 2018, but that followed a 10-year high gasoline consumption level in 2017.

China is the largest EV market in the world. EV sales in China were over three times those of the U.S., with EVs hitting a 4.2% share of all new vehicles sold in 2018. Meanwhile, China’s oil demand grew 5.3% last year. This was a new all-time high above 13 million BPD, and above the 10-year average annual growth rate of 5.1%.

There are a couple of reasons behind the lack of a major oil response. Population growth and low gasoline prices have helped push the total number of annual vehicle miles traveled in the U.S. to an all-time high. That helps offset — and in some cases can completely offset — the impact from an increase in the number of electric vehicles on the roads.

Conclusions

At some point, oil demand will begin to decline in response to EVs. But global oil consumption grew by 1.5% in 2018 — above its 10-year average annual growth rate of 1.2%. Oil demand grew in the U.S. by 2.5% to the highest level since 2007.

Norway’s oil demand had been pretty flat over the past decade before surging last year, and there are some signs that California’s oil demand may be slowing. But despite rapid penetration of electric vehicles, there hasn’t been much — if any — reduction in oil demand.

Given the leading edge examples that we have of Norway, California, and China it seems pretty clear that oil won’t follow coal’s trajectory.

Forbes



22 Comments on "Why Oil Demand Won’t Follow Coal’s Death Spiral"

  1. JuanP on Sun, 1st Dec 2019 10:17 am 

    This article mixes up US domestic data and foreign data as if they were interchangeable. They are not. The drop in coal extraction in the USA will be reversed if coal’s energy becomes necessary to society again, say, because the shale gas peaks. I expect to see future increases in US coal unless American society collapses before shale gas peaks. We will burn everything everywhere down to the last blade of grass.

  2. Richard Guenette on Sun, 1st Dec 2019 11:02 am 

    I don’t believe a word that Forbes writes.

  3. Davy on Sun, 1st Dec 2019 11:03 am 

    “This article mixes up US domestic data and foreign data as if they were interchangeable. They are not.”
    Bullshit dumbass, the article does a good job of comparing similar situations with consumption and EV penetrations

    “The drop in coal extraction in the USA will be reversed if coal’s energy becomes necessary to society again, say, because the shale gas peaks.”
    There the extremist goes with “will” dumbass who know what will occur. Maybe wind and solar take over the difference.

    “ I expect to see future increases in US coal unless American society collapses before shale gas peaks. We will burn everything everywhere down to the last blade of grass.”

    Who the fuck is “we” you and your wife are illegals. Go whine about energy and collapse in your failed South America, dumbass. That is where collapse is in full swing.

  4. Outcast_Searcher on Sun, 1st Dec 2019 12:20 pm 

    A nothingburger of an article. Oil will take longer to decline roughly 50% in demand than coal, since electrification of vehicles will take more like 3 decades than a decade, and because petrochemical demand will globally continue to increase for at least decades.

    So the whole article could really have just been that the drop in oil demand will take longer and hasn’t started yet.

    And of course, that’s totally obvious.

    Between the quality or Forbes’ articles, and the terrible quality and annoying aspects of their site — there’s a reason I ignore Forbes unless an article is copied to a site like this.

  5. Davy on Mon, 2nd Dec 2019 5:54 am 

    “What’s Wrong With the Oil Industry Nowadays? Too Many Claims of Victory are Starting to Sound Suspicious”
    https://tinyurl.com/uqjrgze cassandralegacy

    “It is true that the US oil production keeps increasing, so far, but for how long can it continue growing? Indeed, there seems to be a suspicious excess of glee in these claims of oil abundance. Could it be an attempt to cover some big problems? Hard to say, but one thing is impressive: 2019 should the first year in a decade — since the great recession of 2009 — when the world oil production declined (data by Ron Patterson).”

  6. Robert Inget on Mon, 2nd Dec 2019 9:08 am 

    Cause trains don’t go ‘choo-choo’ any longer.
    Cause ships no longer run on steam power.
    Cause electricity generation is no longer just coal burning centric.
    Cause by 1960 most people stopped using coal to heat their houses.
    Cause coal burning pollution kills almost as many rich people as poor……
    Why London forbid coal burning in the 19th century.

  7. Robert Inget on Mon, 2nd Dec 2019 9:17 am 

    This just in. (why stock market sagging)

    Trump tweeted he’s reinstating steel tariffs on Brazil and Argentina. Why? Because China is buying soybeans from Brazil and Argentina instead of US.
    (US Steel announced layoffs, this is Trump’s reply)
    We really are totally fucked.

  8. Robert Inget on Mon, 2nd Dec 2019 9:22 am 

    Back on topic.

    Cause it’s hard to shovel coal on a DC/3.
    Spitfire pilots have more important things to do.

  9. Duncan Idaho on Mon, 2nd Dec 2019 9:23 am 

    We really are totally fucked.
    The Fat Boy has been bankrupt 6 times:
    https://www.washingtonpost.com/politics/2016/live-updates/general-election/real-time-fact-checking-and-analysis-of-the-first-presidential-debate/fact-check-has-trump-declared-bankruptcy-four-or-six-times/
    Being run by a bankrupt scammer from Queens is not working out well

  10. full woke supremacist muzzies jerk maximum newspeak we ate ribs with this dude on Mon, 2nd Dec 2019 11:01 am 

    I’m sad. I give up everything so nixon (i) can go to china and I loved putin. Then supertard theedirch the smartest poster reversed position and no longer love putin. I feel abandoned like fuhrer murdered SAs to consolidate his power. I love xie too but he violated sun tzu’s rules of warfare by displaying power thereby revealing fake military. Just because whitey supertard trump (muzzie died like a dog, muzzies is not muzzies but was burrial at sea like a muzzie has PhD in muzzies study bit not muzzies ad nauseam) destroy fake msm doesn’t mean putin and xie media is automatically trusted.
    Thank you supertard for colorful language and work on my project

  11. Robert Inget on Mon, 2nd Dec 2019 11:14 am 

    50% of Americans still believe God sent Trump to stop legal abortions, put ‘blacks in their place’, kill Obama Care, Clean Air Act, deregulate mining, kick gays out of the military, Islamics, Hispanics, demoted to second class, stack Supreme Court for generations, refuse to acknowledge climate change is man-made.

    (Trump forgets, all our trading partners are SELLING us stuff we think we need.)

    Trump: ‘Trade wars are good, and easy to win’ – CNBC
    http://www.cnbc.com/2018/03/02/trump-trade-wars-are-good-and-easy-to-win.html

    The coming crash, then depression, America will be called the “Trump Dump”

  12. Duncan Idaho on Mon, 2nd Dec 2019 11:15 am 

    Daily CO2 — Dec. 1, 2019: 410.92 ppm, Dec. 1, 2018: 408.17 ppm

    NB: CO2 concentrations reach a peak in May as the Northern Hemisphere spring greenup begins, and decline to a minimum in October.
    So how are things campers?
    You are lucky to be living with the highest CO2 levels that your species has encountered.

  13. Robert Inget on Mon, 2nd Dec 2019 11:54 am 

    Combine rampant corruption and climate change
    caused drought. In Zimbabwe we have a perfect
    time travel into our planet’s sorry future.

    https://city-press.news24.com/Business/zimbabwe-is-on-the-brink-of-total-collapse-20191201

    ‘The drought has been dire, exposing more than 2 million people to hunger and even starvation if there is no immediate intervention’.

    The US-based Famine Early Warning Systems Network – a leading provider of information and analysis on food insecurity – puts the effects of Zimbabwe’s current food insecurity into greater perspective in its November report, released this week.

    ‘The report warns that “large-scale assistance needs persist and are expected to continue through at least the start of the main harvest” in April 2020’ (30)

    Climate refugee situation has been made worse
    by international (resource) wars.
    I predict by 2030 fifty million (climate) refugees
    will be on the march (north), avoiding starvation.

    If current immigration policies are any indication of things to come, today’s children are in for a
    wild, thirsty, hungry, ride.

    (on YouTube, notice the number of ‘Prepper’ channels cropping up by the day)

  14. Robert Inget on Mon, 2nd Dec 2019 12:40 pm 

    BP, not worried about “peak sugar”.

    SAO PAULO (Reuters) – British oil major BP Plc and U.S. commodities trader Bunge Ltd announced on Monday the completion of a deal to combine their sugar and ethanol operations in Brazil, creating the world’s second largest cane processor.

    The 50-50 joint venture BP Bunge Bioenergia, which will manage 11 plants in five Brazilian states with a total capacity to crush 32 million tonnes of sugarcane per year, will rank only behind Raízen, the joint venture between Royal Dutch Shell Plc and Brazilian energy group Cosan SA.

    When the deal was announced back in July, the combined group was still holding a third position among the world’s largest processors, but since then Biosev, the sugar and ethanol unit controlled by commodities trader Louis Dreyfus, reduced its crushing as it sold two mills in Brazil’s northeast.

    The completion of the deal means BP and Bunge obtained all the regulatory approvals needed. It allows both companies to put together staff and start to plan jointly for the next Brazilian sugarcane season that starts in April.

    IOW’s BP thinking ahead;
    No way is corn ethanol practical in N America.
    It takes more than a gallon of diesel to make a gallon corn ethanol.
    (the good news)
    Gets important Mid-West votes for Republicans.

    Sugar cane has more sugar than corn.
    While sugar has no ‘food’ value, corn does.

    BOTH Argentina and Brazil will draw CLOSER to China as a result of Trump’s War on Trade.
    (((Did Putin instruct Trump to restore steel tariffs on these two S. American allies?
    Putin’s aims are clear, isolate the US from Every Other Democratic State. Today’s Tweet will go a long way to helping Russia and China gain a SA
    trade footprint.

    Try to ask yourself to ‘follow the money’.
    Who actually makes out on ANY of the Putin/Trump alliances?
    IOW’s Who is helped by withholding US Typhoon
    anti tank missiles from Ukraine. (fighting a war with Russia)

  15. Davy on Mon, 2nd Dec 2019 12:42 pm 

    “50% of Americans still believe God sent Trump to stop”

    More blind lying liberal fake news. They can’t get enough of it

  16. Davy on Mon, 2nd Dec 2019 12:56 pm 

    I’m one of those 50%ers BTW bobby.

    dumbass

  17. full woke supremacist muzzies jerk i love cats i love every kind of cats i want to hugs all cats but i can't hug all cats so anyway i'm a cats lover and i love to run sorry im being emotional im thinking about cats again i just love cats on Mon, 2nd Dec 2019 12:56 pm 

    Robert Inget on Mon, 2nd Dec 2019 11:14 am

    50% of Americans still believe God sent Trump to stop legal abortions, put ‘blacks in their place’, kill Obama Care, Clean Air Act, deregulate
    SUPERTard
    if you don’t believe and love (((supremetard))) you fall for anything, that includes muzzies died like a dog muzzie is not muzzie but muzzie is burried at sea like a muzzie but muzzie is not a muzzie
    you fall for gandi-ism and secularlism which is just cover for muzzie lovin’ and jizya payin’, ask dotheads they know all about it.

    muzzie attacked and killed two whiteys, whiteys say to hope no “pretext”. muzzies said muzzies are victims. as mentioned many times when muzzies attack infidels, muzzies are victims. when infidels attack muzzies, muzzies are victims. when nothing happens, muzzies are victims.

  18. Robert Inget on Mon, 2nd Dec 2019 1:06 pm 

    Is a ‘free press’ far too dangerous for Trump?

    https://www.cnbc.com/2019/12/02/trump-campaign-revokes-credentials-for-bloomberg-news-reporters.html

    Next time you see important witnesses entering Congressional hearings, note the number of DC police surrounding these brave men and women.

  19. Davy on Mon, 2nd Dec 2019 1:13 pm 

    “Is a ‘free press’ far too dangerous for Trump?“

    More blind lying liberal puke. Stupid shit for stupid people. Right JuanP!

  20. Robert Inget on Mon, 2nd Dec 2019 1:15 pm 

    Ilke Trump, some contributors here impeach themselves.
    Or would if they were brave enough to use their
    actual names.

    As it stands, their words are as meaningful as
    efforts to remain a urine stain on the internet.

  21. Davy on Mon, 2nd Dec 2019 1:25 pm 

    Bobby, this is not about trump it is about lies and agendas. You are a sick old man. Don’t infect this place. Right JuanP!

  22. Davy on Mon, 2nd Dec 2019 1:31 pm 

    Oops, sorry Robert Inget. I was projecting again. I don’t no whats come over me.

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