Guest Post: It's Not Just Gasoline Consumption That's Tanking, It's All Energy

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

It's Not Just Gasoline Consumption That's Tanking, It's All Energy

It's not just gasoline consumption that's declining--petroleum and electricity consumption are also dropping. Is that indicative of economic growth?

A number of readers kindly forwarded additional data sources to me as followup on last week's entry describing sharply lower deliveries of gasoline. (Why Is Gasoline Consumption Tanking? February 10, 2012)

The basic thesis here is that petroleum consumption is a key proxy of economic activity. In periods of economic expansion, energy consumption rises. In periods of contraction, consumption levels off or declines.

This common sense correlation calls into question the Status Quo's insistence that the U.S. economy has decoupled from the global ecoomy and is still growing. This growth will create more jobs, the story goes, and expand corporate profits which will power the stock market ever higher.

Courtesy of correspondents Bob C. and Mark W., here are links and charts of petroleum consumption, imports/exports, and electricity consumption. Let's start with a chart of total petroleum products, which includes all products derived from petroleum (distillates, fuels, etc.) provided by Bob C. The chart shows the U.S. consumed about 21 million barrels a day (MBD) at the recent peak of economic activity 2005-07; from that peak, "product supplied" has fallen to 18 MBD. The current decline is very steep and has not bottomed.

This recent drop mirrors the decline registered in 2009 as the wheels fell off the global debt-based bubble. Those arguing that the U.S. economy is growing smartly and sustainably have to explain why petroleum consumption looks like 2009 when the economy tipped into a sharp contraction.


A link of interest from Mark W.: Montly U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels per Day) showing gasoline "product supplied" from 1945 to 2011. This shows gasoline has declined about 700,000 barrels per day from 2007, from 9.2 MBD to 8.5 MBD in November 2011. This represents about a 13% decline.

A number of readers wondered if gasoline imports might account for lower domestic shipments. That is a good question, and Bob C. found the answer in other EIA (U.S. Energy Information Agency) charts.

Weekly U.S. Imports of Total Gasoline (Thousand Barrels per Day)

Weekly Imports & Exports of Petroleum and Other Liquids (Thousand Barrels per Day)

Exports of Petroleum and Other Liquids

Here we see that of 8.5 million barrels a day of gasoline supplied, roughly 500,000 barrels are imported. In other words, the percentage of imported gasoline is modest.



The U.S. imports and exports petroleum products, but the net result is imports of around 8 million barrels a day. The U.S. imports about 10.5 MBD and exports almost 3 MBD for a net import total of 7.5 MBD. The secular decline in net imports from the 2006 top is consistent with the view that consumption has declined as a reflection of economic activity.

Mark W.also forwarded these charts of Electrical power consumption. Not only has electrical consumption never recovered the levels of mid-2008, it peaked in mid-2011 and has begun a sharp decline in late 2011.



I marked recent recessions on a long-term chart of electrical consumption to show that the deep recession of 1981-83 barely registered, while the recessions of 1990-91 and 2000-2002 are essentially noise.



That makes the secular decline from 2006 peaks all the more striking. (It is perhaps no coincidence that the housing bubble peaked in 2006-07 along with the extraction of home equity craze.)

Clearly, electrical consumption is in a downtrend with no recent historical precedent. Those claiming that U.S. growth is sustainable and the Dow is heading for 15,000 must square their rosy projections with sharply declining energy consumption. The two simply don't match up.

As a lagniappe, here is a link from correspondent Joel M. on downward revisions to shale oil estimates. This injects a note of realism in the recent euphoric depiction of the U.S. as having essentially boundless supplies of petroleum equivalents. Substantial, yes, virtually unlimited, no.

Shale gas estimates continue downward: Energy Bulletin.


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Matt's picture

Or maybe Iran wants to use technology that has been in widespread use for ~50 years, rather than trying to pioneer the first commercial LFTR with limited resources.

tired1's picture

With +$700 trillion is global assets and two centuries of experience (and with no perceived personal risk) what is really at stake to the top? Got a prob with fiat - doesn't matter. There are trillions of PM's on the side just waiting to help you sell your soul. As long as men can be bribed this shit will continue.

Ruin a country, ruin a continent; so what? Some folks will survive and a banker will be around to whisper in their ears. The terrible thing is that it's not complicated: simple compound interest. No system can infinatelly grow at a given rate without collapsing. The smarter among us have realized that it's just a con job and will do well. Those with a conscience, that cannot play along, well..................

I'll let you know if I am able.

Archon7's picture

"Luckily the Unicorn Brigade have pattens to make cheap energy from.."


... unicorn shit

BobPaulson's picture

Opposite sides of Hubbard's peak look very different.

Mr Lennon Hendrix's picture

Technology, a utopian's best friend, will finish off the low hanging fruit quickly, won't it?

trav7777's picture

bbbut...bbbut...IONIC LIQUIDS!!!!!!!!!!!!!!!!!!!11

certainly those will be magic and will enable us to stripmine the athabasca much faster.  Then we will build a pipeline to Titan

tmosley's picture

Yes, because the processes that produced methane on Titan could NEVER take place anywhere else.

Yet more biased bullshit from Trav.  No surprise to be found anywhere on that one.

trav7777's picture

if you were smart, you'd understand how irrelevant the biotic vs abiotic argument is.

You'd understand that only rate of production matters.  Reserves do not.

I routinely tell people during arguments about PO to assume reserves are infinite.  It's not even germane to the argument what reserves are or where oil comes from.

tmosley's picture

If you were smart, you wouldn't assume that technology doesn't advance in the face of necessity.

Trav sez Necessity ISN'T the mother of Invention.  And Trav took an IQ test and uses lots of capitalized words, so he must be right.

fourchan's picture

10 million+ people not going to work could have something to do with the numbers.

BobPaulson's picture

But..but.. Apple stock is at 500 bucks. Aren't we all rich now?

GeezerGeek's picture

Curious, isn't it, that Apples sells iPhones to wireless companies at a profit and the wireless companies sell them at a loss. I read that ATT, Sprint Nextel and Verizon actually lose money on each iPhone contract. Didn't Microsoft get in trouble for 'giving away' freebies like Internet Explorer? Imagine what would happen to Apple stock if the wireless companies were forced to make a profit or at least break even, on each iPhone sold.

Matt's picture

Imagine how awesome it would be if gas stations could "lock" cars to only be fueled at their stations for the length of a contract, and then sell people automobiles at massive discounts?

New Camaro, only $999 with 10 year contract to fuel exclusively at Exxon Mobil stations!

GM sells the cars for 50 percent mark-up to Exxon, and Exxon sells them at 90 percent discount to customers! That would probably boost the crap out of GDP, for a couple years at least.

Cathartes Aura's picture

ponder that if you apply your awareness to, say, prescription drugs, you might see that SICK are "free" to absorb toxins - via the water, air and fud supply - then are put on long-term subscription plans via insurance or dot-guv-bennies. . . the monies are made in the "long-term" subscriptions, not so much on the initial "product" (toxins). . .

also, doesn't the "accounting" game emphasise incremental monies, rather than 'lump sums"?

CrashisOptimistic's picture

I think this is a powerful effect, but another effect getting little attention is the consolidation of households.

Multiple children are moving back in  with the parents.  That's a refrigerator in a foreclosed house unplugged, the water valve shut and the heat turned off.  It will be no air conditioning of that house this summer.

It's a weekly or monthly grocery trip made in one car, not three, for the two kids households that were dissolved.

This household consolidation is likely a big energy reduction.

As for oil, we have a decrease in consumption (not the same as demand, they are NOT the same meaning words) and a price rise.  What does this say about supply? 



trav7777's picture

It says that the rational conclusion is too scary so I will resort to devices such as conspiracy theories, potent director fallacies, and money printing or the SQUIDZEZ to blame and keep me feeling optimistic.

Red Raspberry's picture

Yes along with all the empty hosues.  I know I see a lot less traffic and customers at the gas tations out here in rural Illinois.  Use to be the gas stations were packed.  Now your lucky to have two customers at a time.

aerojet's picture

You cannot grow forever.  The contraction should be accepted as natural, desirable process.  It's only because we live in a Keynesian debt system that contraction represents some kind of problem--too many promises made on too many faulty predictions.

Toolshed's picture

Why do I have little red pimples all over my groin area?

zanez's picture

Why does it burn when I pee?


Cathartes Aura's picture

so, are you dudes a couple?  obvious parallel is obvious.

DaveyJones's picture

sarcasm? you know that answer

redpill's picture

More of a rhetorical along the lines of "questions average Americans should be asking but are watching TV instead"


This is always a catch-22 with energy.  For maximum profit capacity always needs to be slightly less than demand, through whatever means necessary.  So people think conserving energy will cause it to become cheaper but all it does is prompt a reduction in capacity to maintain profitability.

trav7777's picture

nonsense.  Your statement is defied by 100+ years of oil production where prices were relatively dirt cheap in any kind of absolute sense.

Capacity ran way ahead of demand and that was the way people want it.  The more energy capacity, the more growth can be had, the more money can be lent and the more interest and profits made in the aggregate.

LawsofPhysics's picture

beat me to it, what is the energetic return on investing one barrel of oil again now?  Compare that to 1940, 1950?  exponential decrease in return on investment if I remember correctly.

DaveyJones's picture

In barrel terms, it started off in the hundred(s) to one, it is now easily below ten and the speed of the decline has increased. Somewher in the early eighties we started consuming more than we found. Oops, that was thiry years ago  

redpill's picture

Not only that but it also creates additional barriers to entry due to the large cost associated with startup, exploration, and extraction.  As a result, energy has never been so centralized a business, and it's getting worse.  This doesn't just end with oil, this will be the case across the board.  Don't make the mistake that increasingly expensive oil exploration and/or a peak oil scenario are the only drivers of oil prices.  The story of Enron should be ample demostration of what happens when large players decide to manipulate prices.

redpill's picture

They were only dirt cheap compared to what they are now that the energy market is even more centralized.  There's a reason it's always been called "black gold" and it's not because they couldn't make money on it.


Or were you just trying to segue into a Peak Oil discussion?

LawsofPhysics's picture

not quite, better look at the cost (in terms of capital and energy) for delivering any energy to the customer today.  What's the energetic return on say, the investment of one barrel's worth of oil (and the energy therein) today compared with what it was in 1940?

Wake the fuck up dude.

redpill's picture

What's the point of comparing what we do with oil now to what we did with it in the 1940s?  They are vastly different.  And as dependent upon petroleum as we were then, it was nothing compared to our dependence now.

LawsofPhysics's picture

"And as dependent upon petroleum as we were then, it was nothing compared to our dependence now."

And you think we are less dependent now?  LMFAO!!!!  Thanks for the laugh.

redpill's picture

I think you need to read my comment again.

Xkwisetly Paneful's picture

Obviously, and a good thing the first commercial nuke reactor went online in the 50's making the world obviously more dependent on fossil fuels now than in the 40's.


Cerin's picture

Errr... while nuke plants do provide a statistically significant chunk of the energy we use, it is dwarfed by the size of our fossil fuel usage in both the electric and transport sectors. The transport sector is uniquely extremely vulnerable to a liquid fuels crisis.


There will be oil, and we're not running out any time soon. But we are running out of the variety that most of us can afford to burn, and some very nice (math-based) research suggests we're going to have a problem in about 3 years on the supply side unless we see a large decrease in demand due to another recession. Since our transport sector (and thus our economy) is dependent on this (formerly cheap) liquid fuel, it's not really a surprise that we're seeing some problems.

trav7777's picture


tmosley's picture

No, that is recognition of fact.  Your "there is no such thing as technological advance" is Death Worship.

Matt's picture

The problem is not whether there may or may not be replacement energy technologies in the future, the matter at hand is whether there are new technologies which will takeover from oil before or after a collapse.

I do not see any technologies coming out in the near future that will work, unless Nickel-Hydrogen fusion turns out to be real.

The switch from burning trees to burning coal took place before Europe became totally deforested. The conversion from Coal to Oil for transportation began well before more than half of the world's coal was extracted.

tmosley's picture

Actually, no, the switch to coal occured only after England had been deforested, and the price on imported charcoal created the incentive to switch steel production processes.  And that is the point.  Prices rise until people either decide to do without or they invest in research and capital to provide new input sources.  The E-cat is a terrible place to put a bet, but it hasn't been proven to be a fraud yet.  But there ARE numerous other technologies, including, but not limited to 1001 different algal approaches, 1001 bacterial degradation of biomass approaches, 1001 genetic engineering of various microorganism approaches, 1001 incremental advances in solar technology, a smattering of potential game changers like mass-produced, ultra efficient, cheap as cellophane graphene solar panels, and many other unique or "out there" approaches, such as use of a space elevator made of mass produced graphene to harvest the rotational energy of the planet, or E-cat, or some other crazy thing that no-one thinks will work until it does.  Or just plain old nuclear energy, retooled to make use of nuclear waste.

But of course, the government has to get out of the way.  That will only happen with a worldwide ponzi collapse.

trav7777's picture

you forgot unicorn piss

tmosley's picture

You are correct.  None of those existant or potential advances are unicorn piss.  Your acknowledgement of that is noted.

Mercury's picture

I think it's called inflation.
As in, the decreasing purchasing power of your dollar.

It could also be reflective of one of the finely tuned mechanisms (tax the bad/subsidize the good) by which central planners, in their infinite wisdom, incentivize the adoption of greener technologies (and all that is fair and just) .  The Success of such would also explain declining gasoline consumption.  

One or the other for sure though.

LawsofPhysics's picture

because the U.S. (and the dollar-that you use for petrol) is becoming less relevant every day, energy consumption in the rest of the world is not declining. Bloody pods.

Matt's picture

It would be nice to see a US vs world comparison. I did find world oil consumption, which appears to be plateauing at best.

scatterbrains's picture

To make up for lack of consumption? 

midtowng's picture

Gas prices are so high, in nominal terms, because we are devaluing the dollar as fast as we can.

Unfortunately, you are being paid in dollars.

hyper-critical's picture

There's also a cyclical supply issue. That + QE =?

Period 3 implies chaos...

There is No Spoon's picture

gas prices are high because they're tied to the price of crude

Jumbotron's picture

Smells like defeat


If energy consumption is tanking why are gas prices so damn high?