International Energy Agency calls 'Peak' on OECD Oil Demand

In World Energy Outlook 2009, the International Energy Agency seems to have dropped a bombshell that has been quietly (and politely) ignored. In their main 'reference scenario', the IEA forecasts that OECD demand has already peaked - it never recovers the levels seen before the oil price spikes and financial crisis unfolded.

In recent editions of their World Energy Outlook, the IEA has been reducing their forecast for 2030 total oil supply. But forecasting a decline in OECD consumption is a radical shift.

Here at The Oil Drum we see peak oil occuring well before 2030, with production at that point significantly lower than it is now. However, even the IEA's forecast of 105 mb/d allows for only anaemic growth for total supply of 1% per year. Since they still see strong demand growth from China and other developing nations, OECD takes the hit:

Oil demand is projected to grow by 1% per year on average, from 85 million barrels per day in 2008 to 105 mb/d in 2030. All the growth comes from non-OECD countries; OECD demand falls.

Unfortunately the IEA does not present this oil situation in a figure, however the one below for total primary energy demand gives us a good impression. China, India and the rest of the non-OECD world keep growing their consumption (IEA forecast, not mine!), while OECD is all but flatlining.

For oil, the situation is worse. OECD share of available oil is constrained so much that it declines. The details for primary oil demand alone are in Table 1.3. The peak for OECD demand was in the period 2000-2008 and declines by 0.3% per year to 2030.

Let me repeat that.. *THE IEA* says that OECD oil consumption is in decline, permanently.

It's also significant that in their report they say Non-OPEC oil supply declines from 2010. So all those arguments about technology, increasing recovery, a new Middle East in the Arctic.. all amount to nothing at least in the entire Non-OPEC part of the world where all those clever western oil companies do their business.

All the peak oil analysis that you've read here still suggests that the IEA's forecast is too optimistic, for both OPEC and Non-OPEC parts of the world. And the IEA whistleblower also claims that their forecasts are inflated. But a peak is still a peak, and the IEA now says that OECD oil demand is in decline and will not recover the levels prior to the financial crisis.

This seems to me like a dramatic statement for the IEA to make. This official forecast from the agency representing OECD nations, now conflicts with just about every one of its individual member's own forecasts (and that of just about every private enterprise). To convince decision makers of the inevitable oil decline facing us, we no longer need to refer to the online analysis by peak oil bloggers. You can simply tell your president, chief, boss and your neighbour: The IEA says our oil consumption is going down, what are you going to do about it?

As a footnote, it appears that the IEA is in good company with their updated forecast. Stuart Staniford, now writing at Early Warning, has been exploring recent trends in oil consumption. He also finds that the strong developing economies and the oil exporting nations have a firm balance of trade basis on which to continue increasing their own oil consumption, albeit it at perhaps lower than recent rates, even as high prices and/or hard times hurt elsewhere. Even without a peak in oil supply, Stuart shows that OECD nations will start taking a big hit in oil consumption over the next few years. Any 'real' economic recovery (yet to be sighted) is going to hit a brick wall very quickly if we stick to the old ways of using and abusing oil.


great find!
The IEA table is amazing!
Almost half of the guessed decline comes from Japan
from 4.5 (2008) --> 3.1 (2030)!

the IEA methodology is also interesting and trivial it seems
from 2000-2008 it decreased from 5.3-4.5 thus -0.1 per year
and from 2008-2015 it will " " 4.5-3.8 -0.1 per year

for the longer period .. 2015-2030 3.8-3.1 - 0.7 -0.05 per years)
perhaps one should know the number for 1993 and the -0.05 per year could be explained?

anyway either the IEA does not like Japan
or nobody inside cares to check their numbers and methodology
(perhaps the salaries are not high enough to make more sophisticated calculations!)


it's a good thing we have sharp eyed readers to keep us in check! that's a significant detail that Japan takes such a large share of the pain, but perhaps quite realistic inside the realm of other IEA assumptions.

of course, factor in a real oil supply peak and we'll have declines in every OECD country that make the IEA's estimates for Japan look pleasant by comparison.


reality will not as look for Japan as the IEA predicts
probably we will all be happy to live only with such a japanese like decline.


ps.. isn't it crazy how the well payed IEA economists
make predictions... and claim that they deserve there money?

Ironically, the head of the IEA is Japanese. I wonder what he thinks of this?

yes, I had the same thought.
I guess he is too busy to look at the publications
beyond at best the headline of the executive summary!

ps.. Actually, why did this little article not appear on the entire
oil drum site? I think it should!


The Japanese population is headed down and they are not only great innovators but adept at adopting new industries.Maybe it won't be so painful for them as it looks.A declining population needs only to maintain and upgrade its infrastructure- not much new building will be needed.

I predict that they will be world leaders in renewables and in conservation as well.

The new IEA projections are imo obviously crafted to put the best possible spin on the big picture of oil depletion-tptb are trying to break the bad news gradually it seems while they try to retain some semblence of a fig leaf of credibility.


"I predict that they will be world leaders in renewables and in conservation as well."

They already are. They've been ahead of the curve for a while and have spent more per-capita on efficiency and alternatives than anyone except perhaps Germany and northern EU (trying to find report to post link). Several years ago my price for PV went up significantly due to orders from Japan and Germany. Also, their small, compact geography lends itself to rail, EVs, hybrids, power grid efficiencies, etc. Maybe the IEA chief knows something we don't regarding Japan's energy future.

I should have written "continue to be leaders" of course.

I have a gut feeling that with a falling population there will be numerous desirable positive feedback loops coming into play in regard to energy use.Most of them might be minor in and of themselves but they will add up.

New road construction will not be needed.

Trucks on less crowded roads reduce thier top speed travel and still finish a trip in the same length of time.

Traffic jams will be reduced and it will be easier to synchronize traffic lights.

Older and less energy efficient houses and commercial buildings can much more easily be abandoned to the recyclers.

Skilled labor and manufacturing capacity can increasingly be diverted to energy conservation measures as demand for new construction eases.

Old folks who are retired can much more easily accomodate themselves to energy saving strategies than young folks with families by shifting the time of day energy is used.

At the same time energy demand is falling with the population aggressive renewables programs will increase the percentage of renewables energy in the mix.

Japanese social and economic policies are long term oriented such that they will not allow thier industrial base to die off.They will own a large piece of any substantial new industry once it is clear how the game is going to play out and which particular technologies are going to be around for the long term.They will invent thier fair share and then some of these new technologies.

Japan is not leading the renewable and low-energy revolution. It has very poor policy support for renewables via feed-in tariffs, Renewable Portfolio Standards (a mere 1.63% by 2014 versus Germany's 27% by 2020), etc. Its vehicle fuel-efficiency is lower than in the EU. It's attractiveness for renewable energy investment is 21st (Ernst&Young August 2009 data). Japan is generally thought to be the leader of the renewable revolution because of hybrids, but that focus obscures the larger facts. One reason IEA chief Nobuo Tanaka doesn't talk about this is that he's from METI originally, and METI disparages renewables in favour of nuclear. That's one reason Japan lost its former lead as the world's major solar producer. Whether Japan joins Germany, China and elsewhere in the renewable revolution remains to be seen. The new government is amending the former LDP government's minimalist targets, but there's lots of opposition from vested interests, especially the nuclear people.

Thanks for the kind of reply that enables me to learn something-I was aware that nuclear power in Japan is heavily favored and it seems that if there is a nuclear building boom (dangerous word BOOM in the same sentence as nuclear!) Japan seems to be well positioned to take advantage of it.

The Japanese may have made some bad policy bets but I don't think they have lost thier touch and when business gets GOOD AND BAD (a deliberate mixed pun is intended)-meaning labor and talent in Japan are in excess supply -I will hazard a guess that the people who brought us Sony and Toyota will be in the industrial fore front.

And my point about which way the cards are going to fall may be valid.Right now the only technology I would want to bet the farm on in renewables is wind turbines.I can't see any hint that they can be replaced with some other type of machine.

On the other hand there may still be , probably will be, game changing innovations in solar cells, cpv, batteries,and so forth-if not in the actual product , then in the industrial facilities and processes used to manufacture the product.

Computer chip plants for example are extremely expensive facilities that are sometimes obsolete within a very few years of going into production.I expect a lot of cutting edge industrial plants used in the renewable industry will suffer the same fate.

We often forget that renewable energy excepting wind is still a long way from capable of standing on its own feet without subsidies and that if one wishes to compete for markets in a subsidized industry he can expect that the home grown product will be highly favored when the money is passed out.

It is true that some forward looking countries such as Germany have put enormous subsidies in place, which I believe to be a good policy,but betting on subsidies as the foundation for an industry is inherently risky.If a country's politicians are smart enough to figure out the potential of the renewables industry, who is to say that they might not figure out that the real place they should be spending all that money is on conservation iteself and research and development of conservation oriented industries?

I believe that given the current state of the economy world wide I would if in a position to make the decision direct the money mostly into tightening up building codes, rebuilding and expanding railroads,upgrading existing buildings to use less energy,and so forth.

Then five or ten years or however long it takes from now I would be in a position to say it's time to "pour the coal" to building industrial renewables manufacturing infrastructure making a product that actually is certain to sell like hotcakes on its own merits.

Who ever has the money to build the SELF SUPPORTING plants will get them-leadership in an industry is undoubtedly a good thing but I think it is overrated nowadays and that in any case it no longer means nearly so much as it once did-multinational corporations and banksters look after themselves and could care less about thier nominal homes.

Which ever country has the reserves will get the new industry as relative wages rise in poorer countries and fall in richer ones.Localization and relocalization are the realities of the future as just as surely as the energy crunch.

The cellular phone industry is a perfect example of what I refer to but of course it is one that does not require an enormous investment in industrial facilities-just the opposite in fact.The lesser developed world skipped a century of investment in now obsolete or soon to be obsolete telephone tech and infrastructure.

Another possibility that must be very much on the minds of people willing to invest on the basis of subsidies is that the govts that are promising to pay them might very well be insolvent later and leave the manufacturers high and dry.Nobody in his right mind who is short of money and in danger of losing his job would go in debt for his own wind and or solar power system meaning that the unsubsidized small installation market would consist of the relative handful of people who can afford such a system as an insurance policy.Inso far as installations by businesses are concerned, the bean counters would count them entirely out immediately except in a few cases such as the exceptionally well favored wind farm.

Additionally business people may be short sighted in many respects but the ones at the top are seldom actually stupid unless maybe Daddy owns the company.The last half century or so is littered with examples of industries located in second and third world type countries being nationalized, taxed out of existence, going broke due to the failure of the local economy,civil war, etc.

Right now Venezula is a prime example-If I were a businessman thinking about locating there I would make very sure of several things-all my expensive physical assets would be located outside the country and I would invest as little as possible in training the locals.My idea of a suitable venture there would be cut and sew textiles-haul the fabric in, haul the clothes out, and when the company is siezed or stolen you lose nothing but your sewing machines and whatever goods are in transit within the borders.

( I expect this industry to make a comeback in the US as the ranks of the unemployed here continue to swell and local govts give up on subsidizing convention centers ,sports stadiums, and chamber music in favor of pursueing policies that keep people of the welfare rolls and living in houses rather than under bridges.)

It meanwhile did. We have local editors who sometimes put out new articles on local sites first for a variety of different reasons, but most of these articles get then picked up by the main site within a couple of hours/days. When we put something up on any local site, we inform the editors of the main site by email, and so, they are being kept abreast of what gets published where and when.

thanks Francois,

now I understand!

actually i ``clicked by accident" on New Zealand
and when the next day i looked for it I couldn't find it again.

My guess is that the US will have the greatest percentage decline because we are the most inefficient OECD and we react well to price signals.

"...we react well to price signals" made me laugh! I am remembering all the bitching, moaning, and cussing that was (at least part of) our "reaction" last time gasoline prices went up over $3 a gallon here in the Atlanta area. Probably not the reaction you were thinking of...

The area under the curve above is 750 Gb of demand from 2010-2030 which is totally preposterous.
What is even funnier is that all the growth is set for poor non-OECD countries that can't finance the additional supply infrastructure.
OECD will spend their money trying to get off oil with efficient hybrid cars and shifting to natural gas or low carbon biofuels, etc.
Expected Chindian demand will not materialize.
We are certainly past peak.

Another thing is who is going to refine all this new oil?
China's Sinopec#3 and China National Oil#9 together are big but what about Exxon#1 and Shell#2, BP#4, Conoco#5, etc. PdVSA#6 owns US based Citgo refineries but which his Bolivarian Highness wants to dump. So will the US turn into a huge exporter of oil products to satisfy alleged non-OECD demand. Only problem is US refineries are big money losers.

Booming demand would make the world oil market a total mess (oil tankers from MENA to the US, EU to Chindia--weird).
IEA projections are a joke.

Stranger things have happened - there was that big stink in the 90s about Alaskan oil being exported to Asia. What supply infrastructure do you need to become an oil consumer? If it's just product all you need are retailers, tank farms, racks, trucks, and the odd pipeline. Financing limitations don't seem to have been an impedement to growth of consumption in the past, are you throwing in a never ending credit crunch into the mix? Or foreseeing China's very likely crash and burn after inflating values to the sky? No arguments there.

Here's a graph of the refinery outlook:

Looks like enough downstream capacity to meet demand. Note the predominance of non-OECD, including more than a bit in the ME of course. I've posted about KSA's need to shed non-transportation use of oil, there's a lot of waste that could be curtailed there, possibly with outside assistance.

If you look at it by area IEA's transition from OECD to 'tigers' plus growth looks impossible.
Europe has 25% of refining capacity
North America 20%
Japan-Korea 8%
OECD subtotal +50% to remain flat to 2030
China 12%
India 6%
South America 8%
Russia 8%
Middle East 10%
'tigers' 44%.
to grow from <40 mbpd up to ~80 mbpd in refining capacity in 2030.
Tigers to grow to by 2 mbpd in refining capacity per year for 20 years?
Ain't gonna happen.

maj -- If the Chinese acquisition of the Valero refinery in Aruba (#1 or #2 largest refinery in the western hemishpere I've read) goes through they'll become a major supplier of products to the US. At least until they decide to ship those products to China. As far as Vz goes they cut a deal last year with Hugo: in return for a secure contract many yeasr into the future China is building 4 special tankers and three refineries in China to handle the Vz heavy stuff. The same heavy stuff the Gulf Coast refineries think they access as the sweet stuff runs out.

Speculative ROCK.
I'd rather speculate that the Bolivarian corporal gets a one way ticket to Cuba. That superheavy crude should go to Europe and the US and MENA should go to Chindia.
That is what Nature intended.
How long will the Third Stooge hold on?


Power blackouts, run on grocery stores and a 4.5% economic contraction.

A collapse in private sector investment and output is pushing Venezuela into recession and spells trouble for President Hugo Chavez's state-driven growth model ahead of elections next year. South America's top oil exporter on Tuesday reported an unexpectedly high 4.5 percent economic contraction, largely caused by double digit drops in private sector activities. While other countries, are recovering from recession, Venezuela is just entering it. Chavez promised his socialist policies would protect Venezuelans from global recession and likely faces months of negative economic news. That will compound public anger at poor public services and shortages of water and electricity. Venezuela's opposition is still divided and without an obvious leader but hopes to take a number of seats during September 2010 elections for legislators in the National Assembly, where Chavez currently has a vast majority. "They are very worried that the economic problems combined with all the other weaknesses could spell some real political difficulties for them in next year's elections," said Michael Shifter of Washington-based analysts Inter-American Dialogue.

Don't underestimate the Chinese - they're not exactly dummies (unlike some former US presidents I could name). They're moving to lock up as much of the world's oil reserves as they can, because they know that as they approach US living standards, they're going to need an enormous amount of oil. (They're trying to lock up an enormous amount of everything else, but that's a different topic.)

Venezuela is a mess, and going to get worse, but the Chinese are going to try to take advantage of that, just as they are going to be sliding money under the table to politicians anywhere else in the world.

I know whereof I speak because I have been the recipient of consulting fees from companies which are, unbeknowst to most people, Chinese controlled. I'm comfortably retired now, but some of my nephews are in the same game.

Now, many Americans might think there is something wrong with this, but we're Canadian and from our perspective, any money is good money regardless of whether it's green or not. Canada is currently the largest supplier of oil and oil products to the US, but that could change if someone else made a better offer.

I don't underestimate their ruthlessness but they are way over their heads if they think they can grab resources like in the 19th century. Basically they are parasitic on the global body economic. Are they having much luck snapping up oil resources in Russia, Iran or Brazil?
What are the chances that China will compete with Europeans($6? a gallon gas) on price?
For one thing, Chinese publically traded oil companies are probably acting like Petrobras which was slapped down by da Silva for buying foreign property instead of developing Brazilian offshore reserves for Brazilian taxpayers.
If they buy up the tar sands they'll still sell it to the US for top dollar than ship the stuff home. If China wasn't totally corrupt maybe the Communists could force them to ship syncrude home but let's face it, they are totally corrupt.

The idea that Chindia will be as big an importer of oil(12 mbpd) as the US is now, is wrong, IMHO.

It's not so much that the Chinese are ruthless so much as it is they are canny traders who have a lot of money to work with. While a lot of the oil they are gaining control of is currently flowing to the US and Europe, it is obvious that they are maneuvering to divert much of it to China when the demand is there.

Remember, it is not long ago that China was a net oil exporter. They do produce a lot of their own oil. The only reason they are now an importer is the huge rise in domestic demand.

Are they having much luck snapping up oil resources in Russia, Iran or Brazil?

Where have you been? Yes, they are having a lot of luck.

The idea that Chindia will be as big an importer of oil(12 mbpd) as the US is now, is wrong, IMHO.

China and India combined are currently importing over 6 mbpd, and both are growing like Topsy. It won't be long before their combined oil imports exceed those of the US, although part of that adjustment will be because the US will be unable to afford to import as much oil as it does now.

It's not too soon to invest in a new Chinese-made bicycle for your daily commute.

Rocky -- I agree with you in one sense. The Chinese are not ruthless. They are simply using their huge surplus from the trade imbalance with the US et al to follow a very logical business plan. Not a very unique idea either. I know no one in the oil patch that wouldn't follow their plan or ours if they had the capital. They were buying into Vz oil fields 15 years ago. Last report I saw they are positioning themselves to be Iran's #1 NG developer. As I asked maj: what speculation? It's not as though the Chinese are being very covert about their efforts. We never get the details of the trades but many hit the headlines. And that doesn't include the secret side deals they are making (now that's speculation...but a good bet I would say). I've known some Chinese on a rather intimate level (I adopted my daughter in China in 2000). I said they were not ruthless. But they have very definite idea regarding how one non-Chinese group treats another non-Chinese group: they couldn't care less. A little cold blooded by our standards but if one of their trading partners decides to exterminate a large portion of their society the Chinese would have no problem doing business with long as it didn't interfer with their deal. At the same time it's a violation of US law to be involved even in bribery with foreign companies and countries. What was truly amazing about the attitude expressed in my conversations was that these Chinese had trouble comprehending how we could be critical of their philosophy. They are just doing business correctly in their view.

If we can't figure a way to work it out peacefully tankers just might quit leaving wakes in a decade or two, that is the sudden game changer, lets hope we can transition on a bit smoother curve.

Canada is currently the largest supplier of oil and oil products to the US, but that could change if someone else made a better offer.

Nope. Of the 32 lines that move oil, 31 go directly into the USA. One goes east into Minnesota to a refinery, and then goes to Canada. Basically ALL Canadian oil goes to the USA first.

I think that should change, but when you make noises like that, the Americans get all nasty and rude, as is their wont.

A possible change is when Americans cannot afford to purchase as much product.

The Trans Mountain pipeline goes directly to the Port of Vancouver, and then south to the US. Note that they could fill up Chinese tankers in Vancouver, and that oil would never get to the US.

There's also a proposal to build a $4 billion pipeline to either Prince Rupert or Kitimat, on the Northern British Columbia coast. PetroChina has said it will take half the pipeline's capacity if it is built.

CN Rail has said that it can deliver oil to Prince Rupert for the same price as a pipeline.

The possibilities are endless.

when you make noises like that, the Americans get all nasty and rude

Whereas Canadians are always quiet and polite, but in both wars that Americans invaded Canada, the Yanks got their butts kicked. Canadians are normally too polite to remind them of that.

America invaded Canada since 1867? They have hid that from us in our history. Before that I thought that was English or French country to the north (and southeast for a couple years).

But if you are referring to this squabble I thought it came out a draw and besides it was really only a spat between a province and a state ?-) I hope that one's over as I like to take the boat down to Ruppert once in a while.

No, I was talking about two confrontational incidents, in 1776 and 1812.

In the 1776 difference of opinion, most people forget that there were originally 16 colonies. 13 of which founded the US, and 3 of which eventually founded Canada. The 13 colonies tried invading one of the other 3, but the invaded colonies weren't that keen, and the invaders, notably one General Benedict Arnold, had their own differences of opinion.

In the 1812 disagreement, the 13 colonies tried to bring the other 3 on side with respect to control of the North American continent (i.e. Manifest Destiny). They missed the point that many of the residents of the other 3 colonies (now multiplied to 6 as a result of migration of war refugees from 1776) did not agree with them and were not onside with respect to their agenda. The New England states also did not see the point, and nearly seceded from the US.

The 3-now-6 colony side was also backed by the biggest navy in the world (British), a bunch of adventurous French-speaking woodsmen, and a lot of near-naked screaming savages (Now called "First Nations" in Canada)

In the end, a lot of cities got captured, burned, shelled or dealt with otherwise dealt with in an unpleasant fashion, so eventually both sides declared victory and retreated to their original positions. This makes the War of 1812 one of the more successful wars in history, because both sides got what they wanted (what they already had), and agreed not to do it again. A win-win situation.

As for the Alaska ferry being blockaded by British Columbia fisherman, you have to realize that Alaska can't expect Canadian authorities to show a great deal of interest in their problems if they don't play by the rules of the game, and American authorities have other priorities, too. If you want to play hardball with the big boys, you can't run home crying if someone is mean to you.

Where does Vermont fit into the first conflict, they managed to remain an independent republic until 1791 ?-)

Yeah the War of 1812 was a good one for historians on all sides, everyone declared victory, the casualties may have all seen it somewhat differently. One major correction though, Canada was six British colonies at the time, the U.S consisted of 18 states including Ohio and Louisiana during the war. That war did succeed in making both the U.S. and the future Canada more internally united, and kept the Brits from establishing a permanent Indian country boundary in the U.S. northwest territories (future Indiana, Illinois, Michigan and Wisconsin). I believe that made the tribes the only real losers, not for the first or last time either.

As for the Rupert squabble, I threw that up for fun, it never quite amounted to a Nootka Sound controversy ?-)

But different sides of that one see it differently as well. We Alaskan's really didn't care too much if the ferry stopped in Rupert, and Bellingham just picked up more fares. The mayor of Rupert seemed to have done most of the crying, at lot more people were affected there than the few Alaskan's whose livelihood depended on that one stop.

Not too many road connected ports on the Canadian Pacific are there ?-)

Still, I'd love to get down to Whistler for the big event this winter, but I figure lodging will be through the roof. They may be a bit expensive but the Olympics beat the hell out of and are much cheaper than war. Good skiing to you--downhill is a bit fast for me though, any hill I find tough to climb is even less fun for me to ski down.

Well, not having been there, I can speculate that Vermont was probably typical of New England in not being that enthused about the actual shooting part of the war and more interested in providing material support to both sides at a good profit.

Unfortunately, while everyone else declared victory, the Indian tribes were the real losers in the war. On the US side they lost almost all their territory, while in Canada they were forced to sell most of it to the white guys, although there are still debates about the details. Since the Canadian constitution prohibits taking lands from the Indians without compensation, this debate can get rather expensive for the white guys if they turned out not to have paid for it originally.

Not too many road connected ports on the Canadian Pacific are there ?-)

Not that many, but in Canada we rely on the railroads to do the heavy moving. Pipelines are also extremely cost-effective. Interestingly, Juneau - the capital of Alaska - doesn't seem to have any road connections to the rest of the continent at all. Or a railroad for that matter.

Prince Rupert is interesting because it has one of the best deep-water ports in North America, and a first-class rail line leading to it. CN Rail has been cleaning up big time on moving containers through Prince Rupert from China to the midwest US. Kitimat, to the south of it, also has a very good port, but so far aluminum refining has been its big industry.

I'd love to get down to Whistler for the big event this winter, but I figure lodging will be through the roof.

That's true, but if you knew some of the First Nations people in the area you could arrange cost effective accommodation. At least, that's the approach that people I know are using. My approach is to avoid the Whistler area completely and do my own skiing here in facilities left over from the 1988 Winter Olympics.

Good skiing to you--downhill is a bit fast for me though, any hill I find tough to climb is even less fun for me to ski down.

Well, I like all types of skiing, but unfortunately one of my hips has conked out, and until the hip replacement comes through (free at government expense, this being Canada) I'm going to have to limit myself to cross-country skiing and half-days at the downhills resorts. The Rockies have taken their toll, but the really big mountains (the Andes, the Alps, and the Himalayas) have done my joints in.

It's a tough life, and like everybody else of my age group in this mountain town, I'm waiting for my joint replacements. Fortunately in Canada we get a lifetime warranty.

I'm waiting for my joint replacements.

What's the wait like?

A couple of years. The trick is to get in the queue early, so that by the time your turn comes up you really need it.

Interestingly, Juneau - the capital of Alaska - doesn't seem to have any road connections to the rest of the continent at all. Or a railroad for that matter.

One of our favorite bumper stickers used to be "Move the capital to Pelican" Takes a good map to find it. That was back when a lot of noise was being made to rebuild our capital somewhere nearer Anchorage. A lot of us figured if we could isolate the capital even more the government would do less harm ?-) Interestingly, since Juneau is a unified municipality (city/borough combined), it actually borders Canada.

It will be interesting to see if we ever hook our railroad up to yours, that was one of the best things our former U.S. senator then elected governor was pushing for, of course when he appointed his daughter to fill his vacant senate seat he did loose a little political capital. Pelican might not be isolated enough ?-)

Speaking of the railroad to Rupert I happened to be in Sitka back in 1978 when it washed out big time. I believe a couple of trains were lost in that flooding as well. I headed back out that way and all the road bridges were temporary. The recently finished 'permanent' highway bridges looked like ever so many islands with their reinforced concrete approaches hanging off them and bent to the river. I think the railroad was already up and running though, just a couple weeks after the floods.

I considered moving to Canada in my youth just because of the medical coverage, but I ended up lucky and was able to afford out of pocket whatever I needed for the twenty plus years I ran around with no health insurance. Only Native Americans are born with the lifetime warranty in the U.S. and funding up and downs can make the quality rather iffy. No great hopes for the current reform effort, it is likely a little late to start, but maybe not.

Good luck with the joints. I'm hoping some of the less invasive processes like the one where your own cells are inserted in worn areas can help my less than completely shot joints as the techniques improve.

As to Whistler, I've enjoyed watching the Olympcis since Squaw Valley, almost made it to them in 1988 and thought I just might like to be part of the gathering just once in my life. But the crowd has repelled just a little more than it has pulled thus far.

It will be interesting to see if we ever hook our railroad up to yours

It would be highly feasible, but I think the US government might have to fund it. There's no particular commercial advantage from the Canadian government's perspective.

CN Rail already operates lines in Canada that are as far north as the latitude of Anchorage, but I don't think it would be willing to build a connector to Alaska without subsidies.

It would be interesting if it connected to the Alaska Railroad, though, because the CN system runs as far south as the Gulf of Mexico and as far east as the Atlantic Ocean.

It may happen in little steps. Of course to get into Canada it would be coming from Fairbanks, like the highway. First step, now in the works, is a military funded spur southeast from near the RR terminus at Eielson AFB out about 100 miles to Fort Greely, near Delta Junction, old milepost 1422. A lot of bulky resources in the north, and not all are that close to tidewater.

The big dreamers like exgov Walter Hickel even see a train tunnel to Siberia. Actually Fairbanks got its accidental start when E T Barnet couldn't get his boatload of goods to Tanacross, where the speculators were talking rail lines to the Canadian gold fields and down to the ice free port of Valdez. They figured it was a sure thing within a few years...I think that was back in about 1901, so I won't hold my breath, the gap between the two lines is substantial and much of the country severe. I'd love to see it though ?-)

Talk all you want but when it comes down to it the US military will take anything it wants...........and it will come down to that.
What a joke to even think that the US isn't already planning to seize any and all oil resources.
Screw China and the rest.

Lots of people have thought they could take anything they wanted. Sometimes it works for a while, sometimes it doesn't.

Killing Arabs is one thing, but invading Alberta might be more than even poor soldiers from Texas or West Virginia can take without sitting down to thing about it first.

Mercenaries don't care or have a conscience.

Which speculation maj? All I did was repeat the press releases regarding the deals I've seen.

Which speculation maj? All I did was repeat the press releases regarding the deals I've seen.

You did but to repeat myself, I don't see the Chinese and Indians pumping up oil investments to the tune of producing 115 mbpd in 2030 as cited by the IEA.

China's biggest actual play in the oil hell of Nigeria and Uganda. The rest is loans or 'partnering'.

When I look at these NOCs like Statoil and Petrobras buying shares in projects they look no more capable of producing millions of barrels of oil than the IOCs. Mostly they play Monopoly instead of actually investing. For example PetroChina(PTR-NYSE) is buying into the tars sands. Why? To fuel China? No. To make money for investors by selling at the highest price.

As a Peak Oiler, oil development is not a game any more IMO.

This game of chasing investment money around a poor world only makes steady development even more difficult. The US oil industry was created as a system by Rockefeller(not an oil man but a refiner) out of the anarchy of the market.

Competition is a sin.--John D. Rockefeller

The world needs to develop a stable system for carefully developing the remaining oil supplies.
What we have is an unstable inefficient oil market which reacts to violent price fluctuations by paralyzing the economy.

The way to make money is to buy when blood is running in the streets.--
John D. Rockefeller

seems like a tap dance around peak oil.

Yes, very nice find.

As I understand it, up until last year, IEA made its projections of oil production based purely on their projections of demand--simply assuming that supply will always meet demand and demand will always ramp steadily upward.

Now that they have actually sent geologists into the fields to do independent assessments and were forced to come to the conclusion that supply will not always go up.

So now they have simply exactly reversed their previous formula, claiming that demand will always exactly meet plateauing supply.

Very interesting switch in direction. We are indeed through the looking glass.

I find the IEA projection that OECD demand will fall to be a lot less profound than the second statement that you highlight, and the conclusion that you, correctly in my view, draw from it.

It's also significant that in their report they say Non-OPEC oil supply declines from 2010. So all those arguments about technology, increasing recovery, a new Middle East in the Arctic. all amount to nothing at least in the entire Non-OPEC part of the world where all those clever western oil companies do their business.

I am not at all surprised that OECD oil demand will fall. It seems to be an unavoidable conclusion when one looks at recent demand trends.

But for the IEA to say that oil from outside of the major exporting countries will not react to prices, technology, etc seems to demolish the cornucopian view.

I'm not sure why Phil finds that an OECD decline, in a world of rising consumption, can only cause pain. As the IEA sees world production continue to rise, I presume it sees the OECD decline in consumption as voluntary. Does the IEA hint at a reason for the decline? In any case, if the decline is voluntary, then it shouldn't cause any economic pain (which an involuntary decline in production would).

It seems to fit in with the new embryonic CERA line that we'll hit a demand peak before a geologically imposed production peak. If things hold together long enough, expect to see more of this line of arguing in future.

You're right.. the IEA think that this can be managed without too much pain (with a lot of their usual caveats about investment, leaving oil before it leaves us etc). What is important is how far this IEA report has moved ahead of the official view of all its individual members.

A peak in OECD oil demand/consumption doesn't shock anybody here, although there are differing views about how painful it will be. But almost every individual OECD Government is still running with predictions of oil consumption growth and building airports, highways and everything else on that basis.

So there is now a huge disconnect between what the IEA is saying and what individual members of the same organisation are doing. That is why I see this report as so significant.

it is possible the IEA has been 'chued' on a little bit

No argument from me there, Phil. If the IEA see OECD demand as having peaked, then why build more roads and airports. The only reasons I can see is that the governments either don't accept the IEA line or that they think that, somehow, efficiencies and alternatives will keep everything growing despite declining, or flat, demand.

Road and airport building have momentum, it will take more than just numbers in reports to slow that. It would be good if the us gov at least started reordering it subsidies away from road and airports toward rail, don't know who could wave the magic wand and make that happen but at least Buffet might be raising the awareness level.

Does the IEA hint at a reason for the decline?

My guesses, either:
- Technology and costs improve enough to support a massive increase in renewables or nuclear (enough to have EV's make a difference).
- Copenhagen or any following other conference will force a massive move to renewables or nuclear (enough to have EV's make a difference).
- The old world's economy won't rebound.
- China's capital buys all capacity.
- They stuck their thumb in their mouth and thought up a number

Or a combination of the above ofcourse ;-)

Edit: I had a talk with a representative from one of the network operators in the Netherlands, they expect (in their realistic scenario) about 700.000 EV's in 2020 on a total fleet of 10.000.000 vehicles. There are 6.000.000 vehicles on the road now.

Edit2: Oh, and they drove me around in one of their all EV converted Volkswagen Golf stationwagons. That was a totally awesome experience. Utterly smooth, comfortable and quiet acceleration from 0 to 100 km/h in 8 seconds, so enormously different then my 5-gear diesel (11 sec to 100 when I push it). It gives a rollercoaster ride feeling and with a 200 km driving range! I totally love it and makes me feel even stronger about getting an iMiev when the lease on my old car is finished.

Mmm. Maybe the full report has some reasons for the posited demand peak, I can't think they would simply pull the idea out of their collective arses, without trying to justify it, even briefly.

BTW, I don't expect EVs to save us. Save your money and either buy your leased car or another used car, instead of building demand for more new cars.

True, they won't save us, but the mileage is already half that of an ICE if the electricity is generated with coal or gas. So even in that situation there is a benefit. If savings on my e-bill work out then I have surplus electricity from my solar panels. Using that surplus costs me very little and has zero emissions. 1 kWh should give about 5km range (given a 200 Wh/km average usage).

My employer provides car leases for 4 years so it's hardly economic to buy a 2nd hand car, therefore an all electric would probably mean a good step in the right direction.

Just buy a used Prius, and convert it into a plug-in at your convenience (it's still a bit pricey now, at $7-10K). See

Over on TOD US, I have been tryig to them this for the last two years...the oil age is over, if you define the oil age as an era of growth and technical advancement created by way or the other, it's over. I have abelieved for some time that in the advanced nations, oil demand/consumption would decline whether there was still available supply or not. Oil is destined to be an optional and recreational fuel, not the one that drives economies.


If you accept that peak oil will occur some time in the next 20 years, I would think that declining oil demand must be close to a given? The OECD is also better placed to be able to adapt to these conditions. But even if we take the IEA forecast at face value, I don't see it as particularly outlandish. In fact I would agree - for a number of reasons but primarily these two:

1. Demographics. OECD populations are not growing and they are aging. There will be a lower percentage of people primarily travelling by car over the next two decades simply based on this fact. Japan is the clearest example of this demographic shift, and hence the decline in oil consumption is forecast to be the largest there.

2. Vehicle density. There are already more than two cars per person in the United States. You have to wonder just how many cars each person will be able to own before the vehicle density leads to gridlock. Europe is similar, though a lower density level, but much less road to use - particularly in cities.

Add to these crucial factors the environment policies which are offering incentives to leave cars at home and improve fuel efficiency and I think you have enough forces in play to keep demand under control. In some respetcs this surely represents a victory for the peak oil community as action is being taken by policy-makers and consumers to adapt behaviour in the face of a declining resource base and rising prices.

OECD demand has fallen for every successive quarter since Q3 2005 - this is a trend which needs to be taken seriously.

The other force crimping demand is of course price. Innit amazing how oil at 4-10X the price of a decade ago is causing us to use a bit less ;-)


OECD demand has fallen for every successive quarter since Q3 2005 - this is a trend which needs to be taken seriously.

I agree, but so far (almost) every OECD government does not expect that trend to continue. This IEA report is the first 'official' report I am aware of that does not foresee OECD oil demand growth resuming.

It is (perhaps) the first sign of anybody taking the falling OECD demand trend seriously.

I have long been of the opinion that this should not just be accepted, but encouraged.  Another $2.50/gallon in taxes in the USA would provide ample encouragement and make the 40-MPG cars that Ford and GM are just starting to build into guaranteed hot products.

Yes. Declining oil consumption (and imports) is a good thing, and countries that don't understand that are setting themselves up for long-term problems.

I've felt the same for years Poet. The problem I see now with such an effort by gov't is credibility.Even if we hit a period where the public would accpet suc a fuel tax increase the car makers also know that when the public revolts the politicians will reverse the deal in an effort to assure re-election. Put mor simply: how much of your savings would you risk if the investment depended holding the same course on any issue for 10+ years?

Excellent points, not a surprise. This is all part of a world transition. China and India's large populations will use more per person and OECD countries will have to adapt and use less (ie. smaller cars/smaller homes/less distant vacations).

"OECD populations are not growing"

Can you provide evidence of that? According to the CIA world fact book, the European Union population is rising at, an admittetdly slow rate of, 0.108% and the US population is growing at 0.975%. Japan is contracting at 0.191% (which only half wipes out the EU growth). Australia is growing at 1.195%, with New Zealand not far behind. Canada's growth rate is 0.817%. Mexico is growing at 1.13% and Turkey at 1.312%.

As far as I can see, the OECD is still growing by quite a large number of people each year and, even though the population is ageing, I can't see oil consumption having peaked yet.

What is the big fuzz about OECD reducing their oil consumption ?!
Isnt that quite natural, and in-line with trends !?
When oil price was really high, before the financial crash 2008, people had alreade started to lessen their oil consumption.
And ist the predictions that oil price will rice as soon as we start getting out of this decline now !?
Thus, ven if it could initially be raised, oil consumptoin is probably going to get lower when people sees opportunities for less costly alternatives etc.

Plus that the discussion about climate change, and the environment makes for and extra push for people to be trendy and to act responsibly by buying smaller cars, needing less petrol. Converting house warming to non-oil, adding insulation etc

Even though we are a small part in the global oil comsumption, here in Sweden the government has already a couple of years back taken a general decission that we for the most part should not be depending on oil from the year 2020- and all big decissions hereafter should bear that in mind - which in turn has created rules about energycomnsumption in houses when building new ones, tax reductions for cars haveing less than 120g co2/km (which in fact means consumes less petrol/diesle and thus less oil) etc. In fact the whole of EU takes more and more decisions on these things...
All these little bits may reduce the oil consumptoin even greater that the OECD forecasts i think . . .


It will not just be trendy here in the US for better fuel economy because the EPA has proposed (and certainly to be finalized) a speedy ramp-up of CAFE and carbon dioxide reduction fuel economy standards. And as you acknowleged, there is likely to be some sort of climate change treaty and climate change bill passed within the next year.


Nice catch. The IEA data is inconsistent on so many levels, as if they are trying to hide something.
Ace's catch of a few days ago shows an increased production of crude after 2015. You can see this on Ace's chart:

I pointed out that it is virtually impossible to predict a discontinuous change in slope (look at the figure!) at a point in the future. It really does require a crystal ball to do that.

The IEA report says a lot about the future growth prospects of OECD economies, especially north America.

I think it's the reverse.

In a high oil price world, it's far better for the OECD economies to reduce their oil imports.

I think several people having been saying for a while that in the OECD "post industrial" economies, there is a certain percentage of discretionary consumption which is non essential and much more sensitive to price - things like second or third car, second or third house, winter vacations, business conferences, vanity purchases and luxury activities in general.

I think this is where the OECD decline will come from, and its very justifiable to forcast decline.

The issue for me is, where is the point where fat stops and bone starts. Where is the essential level of consumption for OECD.
Could the OECD get by on 70% of peak usage? 60%?

At what point will people pay almost anything for oil?

Agreed. However, some people are already near the point where the fat stops and the bone starts in many places around the country, especially here in Michigan.


Food Stamp Usage Across the Country

NYT: Food Stamp Use Soars, and Stigma Fades

A recent study by Mark R. Rank, a professor at Washington University in St. Louis, startled some policy makers in finding that half of Americans receive food stamps, at least briefly, by the time they turn 20. Among black children, the figure was 90 percent.

Exactly. Jim. One's man's fat (like me in the oil biz) is another man's bone (i.e a Michigan house builder). While we do have a lot of fat we can cut, that fat feeds a lot of families who are absolutely dependent upon those continued expenditures. This relationship is so often missed by folks who add up all the reductions we can (and may be forced to) muster. Over the decades we've shifted from a manufacturing economy to one largely focused on service jobs. For instance, I see a Mich. house builder as a service industry...not a manufacturing industry: we don't ship these houses to overseas buyers. They are built when a perspective buyer contracts that service. No buyers = no service provided = no income for the service provider.

I have some friends from the design and construction community who would completely agree with you, and have been hearing from them lately looking for work.

I guess a Texas refiner is in the service industry as well, he doesn't ship his product overseas either (Mexico doesn't count?-). Building something for domestic consumption is manufacturing, refining crude into gasoline and other products used domesticly is still manufacturing, even if 90% of the product is used by people in the service industry. I can see how you might have a little narrative fallacy problem in the frameworks you hang your world on ?-)

Valid point Luke. But when you go to a restaurant are you paying for a product or a service? By service I was refering more to the workers then the output. Splitting hairs of course. But my main point was that any effort to cut consumption will cut jobs. I see it as something of a no win situation: make our economy more efficient by putting X millions out of work. We can try to generate new jobs for them. But can you offer a job that won't depend upon some consumer supporting the process by spending? Perhaps a gov't job might fit this category.

But when you go to a restaurant are you paying for a product or a service?

The generally accepted definition is that homes, oil, and food are goods, not services.

"Products of any economy. Services are tasks done by people and goods are material items.

Goods and services are the outputs offered by businesses to satisfy the demands of consumer and industrial markets. They are differentiated on the basis of four characteristics:

1. Tangibility: Goods are tangible products such as cars, clothing, and machinery. They have shape and can be seen and touched. Services are intangible. Hair styling, pest control, and equipment repair, for example, do not have a physical presence.
2. Perishability: All goods have some degree of durability beyond the time of purchase. Services do not; they perish as they are delivered.
3. Separability: Goods can be stored for later use. Thus, production and consumption are typically separate. Because the production and consumption of services are simultaneous, services and the service provider cannot be separated.
4. Standardization: The quality of goods can be controlled through standardization and grading in the production process. The quality of services, however, is different each time they are delivered.

For the purpose of developing marketing strategies, particularly product planning and promotion, goods and services are categorized in two ways. One is to designate their position on a goods and services continuum. The second is to place them into a classification system.

The goods and services continuum enables marketers to see the relative goods/services composition of total products. A product's position on the continuum, in turn, enables marketers to spot opportunities. At the pure goods end of the continuum, goods that have no related services are positioned. At the pure services end are services that are not associated with physical products. Products that are a combination of goods and services fall between the two ends. For example, goods such as furnaces, which require accompanying services such as delivery and installation, are situated toward the pure goods end. Products that involve the sale of both goods and services, such as auto repair, are near the center. And products that are primarily services but rely on physical equipment, such as taxis, are located toward the pure services end."

I knew what you were aiming at Rock. It always bugs me when I see construction as our largest manufacturing sector. Doesn't do much for fixing our balance of trade. I guess if houses are built to be occupied by workers who will either be producing something for export or producing something that will reduce our import needs they could help out, but a huge amount of our homebuilding has been extremely wasteful, pretty much straight up consumption. Doesn't help the long term for sure.

Nick thanks for delineation. I had a feeling there was a bit of a continuum there but my marketing classes were near two score years ago.

Michigan is in terrible shape primarily because of the automotive industry's collapse, not because of oil prices. It was in terrible shape even before the current recession, though certainly this has made it worse.

One could argue that the auto industry collapse was at least partially caused by the auto companies using up their political capital to fight energy efficiency standards and a sound US energy policy.

That suggests they should have conserved their political capital, and used it to get something else. If that's what you meant, what did you have in mind?

It didn't take that much political capital: it was just passive resistance and creating barriers to things like improved CAFE regs.

It also implies that Detroit would have done better with more efficient cars. Sadly, their cost structure was the problem - SUV's were a necessary last-ditch way to use Detroit's advantage in truck manufacturing to buy survival time (a tactic that was only short-term, until the Tundra's etc arrived). There was no way Detroit could have survived competing against low-wage, low-health-care-cost and even lower pension-cost competititors in Ontario, Tennessee, Mexico, and Asia.

I'm not optimistic about Ford staying out of bankruptcy in the long-term.

To support a US energy policy that took into account the coming of world oil depletion, which has been known for decades.

Many in Michigan believe it was a lot more than just passive resistance. Do you really believe that was just a little passive resistance? In fact, some would also say that the Big 3 had a big hand in removing the electrified public transport from Detroit....and in other major cities.

More efficient cars would have helped the auto companies compete in a world of reduced oil supply.

I agree with your point on the competitors. It was an unsustainable situation. Wonder how all of those wages, benefits and pensions got out of hand?

I hope Ford is remains viable as they have been so far.

Many in Michigan believe it was a lot more than just passive resistance. Do you really believe that was just a little passive resistance? In fact, some would also say that the Big 3 had a big hand in removing the electrified public transport from Detroit....and in other major cities.

General Motors was once convicted in court of conspiracy to buy up streetcar systems and replace them with diesel buses. Its co-conspirators were Firestone Tire, Standard Oil of California and Phillips Petroleum.

For more information, do a Google search on "General Motors Streetcar Conspiracy". The results are highly entertaining and great reading.

Unfortunately, now that the taxpayers are bailing out GM, it's not quite as funny. It would be nice to have some of those systems back.

Did you know that Southern California once had the largest interurban electric railway system in the World? Wouldn't people in Southern California like to have one just like it today?

Do you really believe that was just a little passive resistance?

I wouldn't call it "little", but I think it was resistance - IOW, a lack of policy, rather than trying to create policy. I was wondering what other policy might have helped them. More on that below...

some would also say that the Big 3 had a big hand in removing the electrified public transport from Detroit

I don't think there's any doubt - they were found guilty in court of dismantling trolley systems across the country, including LA's.

More efficient cars would have helped the auto companies compete in a world of reduced oil supply.

That's the idea I disagree with. Having a better product mix wouldn't have helped - small cars are almost as expensive as large cars to make, but you can't charge as much for them. Detroit's cost structure was just expensive to compete with Asian/Canadian/Mexican/Southern labor.

Wonder how all of those wages, benefits and pensions got out of hand?

It was an accident of history - a greek tragedy, almost. Almost impossible to avoid. It became almost inevitable 35 years ago: US manufacturing had no competition before that, and Detroit's cost structure was based on that environment, and was almost impossible to change without bankruptcy.

At what piont will people pay almost anything for oil?

Now this is a very interesting question indeed.

The time frame and the sunk costs of purchased oil using equipment will have a great deal to do with the answer.

I have seldom ever been without a car or truck but on occasion years ago I used to spend twenty or thirty bucks for a cab when that same money would have taken me many times as far in my own car.

Given the fact that I already own a tractor that would have essentially no value except as scrap without fuel I could pay twenty dollars a gallon for diesel right now much easier than I could farm with a horse or mule as my grandparents did.

There are many tens of millions of cars around that will last a very long time if they are driven only a little occasionally.I have very little money but even at twenty dollars per gallon I would fire up my Escort and drive to town once in a while rather than walk.It seems likely that the property tax and registration fees will necessarily be modest, and with very few vehicles on the road being driven slowly to increase gas mileage the accident rate will be very low indeed so insurance should be cheap too.
In the event of a near total collapse I probably won't worry about insurance and valid tags anyway.I'll just be hoping the dentist and the drugstore and the hospital are still open.

As I see it there may not be an upper limit to the value of diesel and gasoline so long as there is ANY money in circulation until after there is such a bad collapse that there is no reason to want to drive anywhere.Of course a lot of roads will quickly become impassable but a great many will still be passable for decades at least with even the most minimal repairs such as filling in washouts.

A hundred dollars would not seperate me and my last gallon of chaisaw gas today as it would take a week at least for a much younger guy to cut as much firewood to length by muscle power as I can saw up in two or three hours with a good chainsaw.

A few barrells of diesel treated with fuel stabilizer stashed now will appreciate much faster than gold or very nearly anything else except maybe solar panels and good long life batteries.

Of course the inability of people to pay such prices-the inability of the economy to absorb them -will choke of demand and thereby put a cap on prices.But there is also a strong possibility that high prices can in and of themselves precipitate a real sitf crisis such that deliveries cease to be made .

Anyone who believes in hard collapse and is making plans to cope should include a substantial stash of fuel and lubricants adequate to last thru an emergency transition to a powered down subsistence lifestyle.

Could the OECD get by on 70% of peak usage? 60%?

The US could reduce it's consumption by 35% just by carpooling.

If we assume that: the IEA is correct and demand for oil has peaked in OECD countries. That there is no substitute for oil. And further, that energy supply must grow for the economy to grow, then our debt and interest based Capitalist economic system is going to die.

When the growth stops for a short time, we get recession, if it continues longer-term, we get depression. If growth doesn't return we go into permanent depression. This is not an if, might, or maybe, it will happen.

We have a choice, we can part company with our Capitalist economic system now, or die along with it. We are long overdue to admit the obvious; exponential growth (compound interest and fractional reserve banking),can only continue for a short time on a finite planet. Ultimately the paper asset bubble can no longer be supported by the tangible resource base. The problem is that "ultimately" doesn't appear to be that far off.

On this topic, you might find these works by Richard Douthwaite and Thomas Greco on Money a good read, if you have not read them already.

Here is a program from our local public radio station that features their presentations from our recent Conference on Michigan's Future

That there is no substitute for oil.

That's a very unrealistic assumption. See

Nice website discussing EV's, etc. This seems to be the natural direction to head. We still need to generate the electicity to power these and do not seem to be building many new power plants these days. In Michigan, the average age of our plants is 53 yrs and they will need to be replaced. If you take coal out of the mix due to valid climate change considerations this limits the options.

The well-to-wheel energy pathway for an electric car is about 2/3rds more efficient than for an ICE vehicle. It will take the equivalent of around 50 - 1100 MW nuclear power plants running at 90% CF fueling EV’s to replace just 25% of current US transportation oil.

It would be great to see us ramp up CSP plant builds to provide some renewable power supplies. The availability of CSP in the pacific southwest is about 5 times the electricity that we currently use in the US according to a recent IEEE report.

Nice website discussing EV's, etc.


If you take coal out of the mix due to valid climate change considerations this limits the options.

That's what we should do, but it doesn't have much to do with what we will do. Coal plants have a lot of underutilized night-time capacity to charge EVs. Are we going to decide not to use that capacity, or shut down those plants, even in the face of demand for power that can't otherwise be met? No, that appears highly unlikely. If other generators (natural gas, wind, nuclear) don't appear in time, we'll use coal. We may apply a charge to it via cap-and-trade, but that charge would have to be extremely high in order to actually cause a shortage of electricity or raise electricity prices dramatically. So, do Climate Change considerations really foreclose our EV options? For better or worse, they don't.

It will take the equivalent of around 50 - 1100 MW nuclear power plants running at 90% CF fueling EV’s to replace just 25% of current US transportation oil.

That overestimates the number by about two times. 2/3 of US transportation oil is personal transportation: about 9M bpd. We could replace all personal transportation with only about 85 such plants (assuming 3B personal VMT, and 4KWH/mile).

More importantly, we can build wind power much more quickly and affordably, and wind power and EV's are synergistic, as EV's would provide the night time demand that solves the night-time generation problem that is a larger barrier to wind power than intermittency.

And, of course, if all fails we'll use coal.

I agree that climate change considerations don't foreclose the use of EV's for the reasons you outlined.

I am afraid I don't follow your math on the transport energy requirements.

Wind is great so you will get no argument from me on that. However, I think there is a lot more potential energy available from the sun than the wind.

math on the transport energy requirements.

Start with 230M light vehicles, @13K miles/year each. That gives us about 3B vehicle miles traveled per year.

Divide by 4 KWH/mile to get annual energy needs, then 8,760 hours per year to get average power of about 85GW.

there is a lot more potential energy available from the sun than the wind.

Sure, it's just that wind is still a lot cheaper, and likely to stay that way for a while.

That should be closer to ¼kWh/mi, but that's for a small to mid-size passenger car.  Other vehicles will take more.

A few years ago I did a calculation on this and came up with 107 GW to replace gasoline.  The details are here.

Oops - yes, I meant 4 miles per KWH.

And, yes, existing pickup and SUV designs would be less efficient - the DOE found around 3 M/KWH several years ago (with NIMH batteries, which are less efficient). Those designs, of course, could be improved substantially.

Also, for all vehicles we can expect continued improvements in the various points of energy loss: electric charging; drive train; rolling friction; and aerodynamics.

107GW would correspond to 3.2 M/KWH, which I think would be a bit low for the current fleet: in effect, I'd estimate that current ICE's are less than 20% efficient.

Written by Jim MacInnes:
It will take the equivalent of around 50 - 1100 MW nuclear power plants running at 90% CF fueling EV’s to replace just 25% of current US transportation oil.

Or improvements in energy efficiency and a depression will reduce demand for electricity elsewhere requiring fewer new electric generators.

Any discussion of energy ultimately comes back to money and banking. It now looks like our financial system will do us in long before we exhaust our remaining energy supplies.

A real eye opener is Ellen Hodgson Brown's "Web of Debt." I highly recommend it. Energy and finance are intertwined and knowing how our system works; not how people think it works, but how it actually works, is essential to understanding our predicament.

yes, I have Ellen's book and she presented at our conference LY.

It seems to me that this story misses the point: IEA projections of flat or declining OECD energy consumption reflect the improvements in energy efficiency (GHG intensity) we've already seen over the last decades extrapolated into the future. They also reflect existing policies regarding climate change, such as the EU's Emissions Trading System. IEA, like the EIA, uses existing policies only to project future economic growth and expected fossil fuel consumption.

The fact that IEA projects OECD fossil fuel consumption to be flat is merely an indication we are finally getting more efficient and starting to take climate change seriously at the policy/legislative level. It has no reflection, in my view, on what IEA thinks about world energy PRODUCTION, rather than consumption, except insofar as IEA still merely matches projected consumption with expected production (in order to balance their forecast). And that's a whole different story, explored in detail in other articles on this site.

Improvements in energy efficiency will help but ....

Governments Must Take Steps To Avoid More Dubais: El-Erian

"The global economy has to produce high growth, the global economy has to produce jobs," El-Erian said in a live interview. "If it doesn't then we're going to have a major adjustment, a multi-year adjustment."

There are certainly issues but IEA doesn't project negative economic growth in its current energy consumption forecasts. Rather, it projects an increase in energy efficiency so that economic growth can continue without an increase in energy consumption.

To your point, Boomberg News recently reported: "The economy of the group’s 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011, the Paris-based organization said in a report today (Nov 19th). Output will contract 3.5 percent this year. The OECD, which advises members on economic policy, forecast 2010 growth of 0.7 percent in June."

Time will tell if this more recent forecast is realistic and if it is going to be large enough to pull us out of this Pimco's El-Erian alluded to.

Phil - it's great that you caught this, and I agree with your interpretation - that they just couldn't realistically see a way to keep OECD demand growing in their scenario building, given the need to accomodate the developing world. Also, thanks much for linking to my post. I have another one that may interest a few readers on cross comparison of oil efficiencies in different economies, and who is getting efficient fast enough for their economy to still grow given stagnant oil production.

Thanks for bringing this issue up Phil.

Think of basic supply & demand, which are functions/curves plotting price against production/consumption. Technically, the IEA is assuming a declining consumption by the OECD. According to supply & demand, consumption can go down due to two reasons: reduced supply (leftward shift of the supply curve) or reduced demand (downward shift of the demand curve).

TOD has focused on reduced supply (due to geology, ELM, etc). Reduced demand is defined as a decrease in the price the OECD is willing or able to pay for a given quantity produced. "Willingness" may decline due to substitution/alternatives, but one needs to make a strong case for the a shift to other energy sources, EVs, etc to have any confidence in a significant change in willingness. There are lots of people who would be happy to use the embodied potential of oil given the chance.

"Ability" may decline due to recession, over-burdened debt-load, aging demographics, etc. No problem building a strong case for this effect.

So the IEA may believe in a prediction of reduced demand due to reduced willingness of the OECD to buy oil, but their info better supports a case for on-going recession.

It seems to me that the story that "oil production is decreasing due to declining demand" will increase in the MSM (and by IEA, EIA, CERA,...) as we slip down the slope. Anything to avoid reckoning with the reality of the supply side (to avoid general panic and realization by the masses that there are no long-term growth prospects). That's why I feel it's important to be clear on the elementary supply & demand interactions to counter such arguments. Once global production/consumption really starts dropping, a supply-constraint cause means higher prices while a demand-decline cause means lower prices. Of course this can become complex if there is a cycle of reduced supply due to geology, and periodic demand-destroying recessions.

In the past months commentators talked about peak oil productions which cannot satisfy demand. Suddenly, one talks about OECD peak oil demand that is decreasing. If true, this gives ammunition to those people that all along said that production will continue to top demand and a squeeze is far into the future.

A way to test whether this is an affordability issue would be to find a giant oil field tomorrow that holds the price at $20 for the next century. Either SUVs and the growth thing will become cool again or something has changed with consumer psychology. Maybe it is a combination of factors.

I also question whether non-OECD demand can grow for long. It may be that China 1.3bn and India 1.2bn simply have too many people to enable a majority making it to the middle class. The world may have already done that experiment with Europe, North America and a few other places. Now there are no longer enough resources for a second wave.

It seems that every day there are contradictory statements about oil production and consumption. Case in point:

Quote from above article: "Let me repeat that.. *THE IEA* says that OECD oil consumption is in decline, permanently."
"Demand for oil after 2010 could increase significantly and this may pose a risk to global recovery, International Energy Agency (IEA)
chief economist Fatih Birol said on Monday."

We have seen several years of generally flat to declining OECD consumption and generally rising non-OECD consumption.

It seems to me that this story misses the point: IEA projections of flat or declining OECD energy consumption reflect the improvements in energy efficiency (GHG intensity) we've already seen over the last decades extrapolated into the future. They also reflect existing policies regarding climate change, such as the EU's Emissions Trading System. IEA, like the EIA, uses existing policies only to project future economic growth and expected fossil fuel consumption.

The fact that IEA projects OECD fossil fuel consumption to be flat is merely an indication we are finally getting more efficient and starting to take climate change seriously at the policy/legislative level. It has no reflection, in my view, on what IEA thinks about world energy PRODUCTION, rather than consumption, except insofar as IEA still merely matches projected consumption with expected production (in order to balance their forecast). And that's a whole different story, explored in detail in other articles on this site.

I've wondered if Jevons' Paradox only really works to a significant degree in developing countries, which the UK was when Jevons observed the phenomenon. I's possible that the same advances in energy efficiency that may cause energy consumption to decline in developed countries may cause energy consumption to increase in developing countries. In any case, I expect to see a continued pattern of flat to declining consumption in OECD countries with generally increasing consumption in developing non-OECD countries.

I agree Jeff, but don't you think the lead article gets it wrong in making a big deal of IEA's projected OECD energy consumption peak? This seems to have very little to do with IEA's far more important projections re energy production, not consumption.

Tam Hunt.. as I've said above, I agree that it is not big news to us here that IEA sees OECD oil demand peaking. But your Government and my Government do not believe their own oil demand has peaked, yet the IEA says it has.

Those who do not see this as big news may be underestimating how far behind us our governments still are. And for the first time, the IEA is ahead of most of them.

Has the Jevons Paradox been proven to be applicable in an era of resource decline? When it was formulated, resource availability was increasing because mining improvements were effectively increasing the amount of usable stuff in the ground.

"The fact that IEA projects OECD fossil fuel consumption to be flat is merely an indication we are finally getting more efficient and starting to take climate change seriously at the policy/legislative level."

More likely its an indicator that we will continue to have crapped-out, declining economy.

Antoinetta III

Conservation = Growth
Or like my pappy used to say: waste not, want not.