We’ve covered this before, but it’s worth repeating. The OECD nations are all driving less, while developing nations are all driving more. Basically, and I bet almost 99% of westerners will be shocked at this thought, but people in China, India, and, yes, Iran, are increasingly more able to do what we used to do without thinking about it: They are outbidding us for oil. More on that later, but first here is a nice summary of the US situation from the New York Times:
Here are some quick points from the article:
1. decline preceded financial crises by 2 to 3 years [but that crisis intensified it]
2. US Vehicle Miles Travelled is now 9% below peak and equivalent to 1995 percent level per capita.
3. it definitely reflects a generational shift:
‘From 2007 to 2011, the age group most likely to buy a car shifted from the 35 to 44 group to the 55 to 64 group, he found.’
4. and seems to be related to new technology:
‘The percentage of young drivers is inversely related to the availability of the Internet, Mr. Sivak’s research has found.’
Perhaps Joyce’s investment in Ultra Fast Broadband will be the complete undoing of the longed for great economic outcomes from his other and much much more expensive idea; The RoNs programme?!
A couple of charts from Advisor Perspectives:
Anyone still think that pushing up the petrol price won’t or can’t influence driving behaviour? More contradiction in government policy; the recent and continuing fuel tax rise is in order to fund their lavish road building programme but those extra nine cents are adding to the incentive to park the car and find another way around. This government is over investing in the wrong mode for the times.
These charts also make it clear that this is no blip; this is a discontinuity. A once in a lifetime shift in direction by our culture. We really, really, need to be designing policy with this fact in the front of our minds. It seems there is a problem here, because if there is one group that haven’t got the memo it’s the older wealthier male, that’s right, the group that makes all these kinds of decisions for us:
The Driving Boom — a six decade-long period of steady increases in per-capita driving in the United States — is over.
Americans drive fewer total miles today than we did eight years ago, and fewer per person than we did at the end of Bill Clinton’s first term. The unique combination of conditions that fueled the Driving Boom—from cheap gas prices to the rapid expansion of the workforce during the Baby Boom generation — no longer exists. Meanwhile, a new generation — the Millennials — is demanding a new American Dream less dependent on driving.
From the Frontier Group, PDF here [my emphasis]. And here’s how they illustrate this change to the American Dream:
Nevermind, cos all that fracking business is going to make petrol as cheap as chips again isn’t it? Er, No. Here is a link to a long [50mins] interview with a Texan Oil Geologist, Jeffery Brown, who explains the technicalities and economics of this in a straightforward language just why, despite all this talk of abundant supply, the price of oil stubbornly stays high and will almost certainly keep going up:
In short, we are scrapping the bottom of the barrel; not in total, there’s still a lot of oil in the ground, but for the rate at which we are consuming it the corresponding production flow is too low because all the easy to get fields are diminishing. The supply demand balance is now determinedly hitting into geological and practical limits. We have to use less.
But we are aren’t we? Well if that ‘we’ is the OECD then that’s true, the US and Europe certainly are. In fact these two areas have shed about 5million barrels a day in consumption at just the same time that China and India have increased their imports by this amount and then some:
The developing world is outbidding the ‘west’ for this most crucial of commodities. Listen to Jeff Brown above for how this can be. Basically the developing countries can put that same oil to more productive use than we can. Because they are only beginning to base their economies on liquid fuels their uses of this valuable resource are more useful than ours. Jeff Brown’s example above is that the fuel an Indian farmer uses to run a pump to irrigate his fields is a more productive use of that fuel than us westeners burn driving to the mall to pick up a latte in an SUV.
While this is true for now these countries will also hit a limit to what they can afford as well, especially as they are beginning to use it less efficiently too [many there are pursuing last century's lifestyle too] and that includes the producing countries, especially when, because of either rising consumption or falling production or both, they flip from being net exporters to becoming net importers. As have the UK, Indonesia, Vietnam, Egypt, and a few others recently.
Egypt seems topical so here’s the oil history, note it’s much more the rising consumption than the decline in production that is troubling them. But still that’s half a million barrels not on the global market for other net importing countries like New Zealand to buy and burn. It basically is not good for social harmony to run low on energy:
From here: The Energy Data Browser
Here’s a brilliant comparison. Italy has been hard hit by recession, in 2011 apparently more bicycles were bought there than cars, but there’s a different story in Iran, despite the US sanctions:
Both of these charts are from Gail the Actuary on The Oil Drum, in a fascinating article on the politics of oil, here. And basically illustrate how the old postwar definitions of the world are being inverted.
It is true that the US/Canada are in different shape compared to Europe because of the Shale and Tar Sands resource, as Gail’s charts below show. But while that uptick in US production is significant the really good news is that drop in consumption. Europe’s chart is showing the rapid decline of the North Sea fields swallowing any new production. And remember Shale Oil faces swift almost immediate declines unlike conventional fields and is extremely expensive to extract. The US production honeymoon is only half the story and will not be permanent.
What matters now more than ever is what sources and forms of energy we have available and especially what uses we put it to. If only the US were putting more of that Shale resource into transitioning away from oil-dependency, and from other fossil fuel sources for electricity, then it would be of even greater value. And here in New Zealand if only we understood our wealth in electrons and our relative poverty in hydrocarbons must shape the way we live more if we are to prosper through the coming century. Unfortunately those in charge are determined to cling to old models despite of the facts.
And the key to people understanding that this shift is necessary and is not to be feared is that prosperity and happiness are not dependant on us all burning ever more amounts of oil and other fossil fuels, in fact quite the reverse is clearly the case. I do believe as a society we are going to power down, but that will not necessarily mean a step back in time to a less comfortable existence, but if we do it well it will mean a more sophisticated society just one based on less brute force.
There is a Saudi proverb I really like [for they too, despite their current riches, face the same problem, perhaps even more so]:
“My Grandfather rode a camel, my father drove a car, I fly a plane; my son will ride a camel”
It seems to me that the son’s camel will be different from the grandfather’s one:
[Solar Camel: delivering vaccines in the desert]