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By Robert Rapier on Jun 18, 2013 with 5 responses

Did Global Oil Consumption Slow in 2012?

I hate the phrase “Innocent until proven guilty.” When serial killer Ted Bundy killed his first victim, he wasn’t innocent just because a court had yet to convict him. The correct phrasing — which practically nobody uses — is “Presumed innocent until proven guilty.” Yet nearly everyone says that a person is innocent until proven guilty. Most people know what is meant when someone says this, but there is the potential for confusion.

Language is important. The way we write and say things is important. I can’t count the number of times I have seen a news headline that would lead most people to conclude something entirely different than what the data actually suggested.

Take the recent release of the BP Statistical Review of World Energy 2013. There are a number of key takeaways from the report, and I will be delving deeper into the data in upcoming articles. Some of the important points were:

  1. Consumption growth of all forms of fossil energy grew by 1.8% year-over-year, below the 10-year average of 2.6%

  2. The US recorded the largest oil and natural gas production increases in the world, and the largest oil production gain in US history

  3. Coal remained the fastest-growing fossil fuel, with China consuming half of the world’s coal for the first time

  4. China and India alone accounted for nearly 90% of the net increase in global energy consumption

  5. Global nuclear power output had the largest decline ever

I have seen the first point above misreported as “Global Fossil Fuel Energy Consumption Slows.” I have seen others write about the reduced demand for oil. That’s about as accurate as “Innocent until proven guilty.” For instance, in 2011 global oil consumption was 88.9 million barrels per day (bpd). If global oil consumption slowed in 2012 — as some sources have written — what would consumption need to be relative to 2011? Less than 88.9 million bpd. But according to the BP report, in 2012 oil consumption was 900,000 bpd higher than in 2011 — a new all-time record.

global oil consumption

What is correct is that growth in oil consumption slowed in 2012. From 2009 to 2010 global oil consumption increased by 2.8 million bpd. From 2010 to 2011, consumption increased by another 1 million bpd. But in failing to note that it is the growth in oil consumption that fell, and not actual oil consumption — many are left with a false impression that perhaps the world is beginning to wean itself off of oil. To the contrary, this is an accurate headline: “Global Oil Consumption in 2012 at New All-Time High.”

Link to Original Article: Did Global Oil Consumption Slow in 2012?

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.

  1. By Shiggity on June 18, 2013 at 4:25 pm

    An interesting graph to compare this one to is the growth of solar PV over this time frame and the cost decrease of PV over this time frame. It matches the graph almost perfectly inversely.

    2005 and 2015 will be energy hallmark years in history. It’ll all look so obvious in hindsight, some people just have trouble thinking in terms of paradigm shifts and exponential trends.

    The free market is trying to grow way faster than it is able to now. Oil cannot provide the growth that western industrialized nations want anymore.

    • By Robert Rapier on June 18, 2013 at 5:12 pm

      I am going to be covering this in an upcoming article.

  2. By Benjamin Cole on June 21, 2013 at 3:17 am

    Ah, the vagaries of headline writers and of perception.

    Still, that chart on oil consumption shows a big change after 1979, and a smaller change lately—one more change and increases in annual oil consumption will flatline, or nearly.

    The chart shows oil consumption doubled from 1965 or so to 1975 or so, a ten-year period. It has not doubled in all the years since, indeed looks like it is up only about 50 percent in the last 35 or 40 years.

    Oil is expensive now, near $100 a barrel. Barring major political problems, we will probably see global oil production keep rising, while demand is squishy.

    We may even see oil gluts; and OPEC (Saudi Arabia) is already taking crude off the market.

    We are not there yet, but PHEVs get close to making sense at $5 a gallon, and the technology is improving al the time. CNG and LPG cars and trucks are multiplying rapidly.

    The good news is that gloom-and-doom seems out of the picture. It appears a transition to better fuels or technologies is underway, and most of these appear to be cleaner.

    I would not mind if PHEVs became the car/truck of choice in urban areas; indeed I wonder if urban areas would not be within their rights, so to speak, to outlaw ICEs. Who has the right to pollute the air that other people breath?

    There is always the chance that China will mandate PHEVs in 5-10 years, throwing a huge monkey wrench into predictions about demand. They did that already with scooters.

    I see a cleaner and more prosperous future—barring man’s stupidity in dealing with his fellow man.

  3. By TimC on June 21, 2013 at 11:46 am

    From 2011 to 2012, total world oil production rose by an average of nearly two million bpd. This increase was greater than the linear uptrend in production that began back around 1982, parallel to the linear uptrend in consumption shown in the figure above. You would have to squint at the BP data pretty hard to see any sign of an impending world oil production peak. Is the data proving Maugeri right?

  4. By ben on June 21, 2013 at 2:06 pm

    I like Benjamin’s upbeat outlook and tend to think consistently higher oil prices of the recent past contribute to some beneficial influences. I can’t say the energy paradigm has shifted, but it’s probably fair to suggest there is a more mature market for alternative sources that likely outlives interim measures (subsidies/mandates) from the public sector.

    I have not seen OPEC cutting production despite major gains in NA output and tend to believe that pressures exist for various countries to defend their own objectives. This invites internal tensions as non-OPEC production advances. Might this be the basis for further reductions in energy costs? Perhaps, so long as the debt hangover and and systmic deleveraging continue to dominate macro dynamics. The overdue retreat from monetary QE later this year will allow market forces to recalibrate prices more in keeping with supply and demand. Fear seems to be having a pretty good run in recent memory and that has a way of simply postponing underlying factors.

    Thanks to Robert for pointing out the sleight of hand by the ole Spinners.


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