Peak Oil is Here for the OECD

Peak Oil consumption appears to have hit the OECD nations, with consumption down 10% over the past 5 years.

Still, the decline rate is somewhat better than many expected. Ethanol in the U.S., along with increased domestic production, softened the blow somewhat in that country. Europe, for a number of reasons, did not experience a decline, point to point, during the period.

Ethanol is a one off and the increased Oil production both domestically and in Canada are not going to grow at the same level... so if the rate of change remains the same, in 2017 U.S. domestic consumption could very well be below 16 million barrels per day, down 25% in 10 years, peak to trough (and it could be more and it could be less).

That's bad... but it could be a great deal worse. The U.S. trucking model for the distribution of goods will  have to get a great deal more efficient and expensive... but at least it will still be functioning. The volume/tonnage will be lower obviously, but the necessities will still get through.  There is a point though where that simply won't be the case. The U.S. is a BIG place, and big rig trucking is a simple equation - 4 miles per gallon. 1 less gallon of diesel supply = 4 fewer truck miles.

Of course there will be adjustments. Homes in the Northeast, for instance, can be converted to Natural Gas heating from heating oil, and heating oil is close enough to diesel... but that number just isn't that big. No, the adjustments will come in the form of fewer consumer and capital goods being trucked around. Perhaps railroads or waterway shipping will make up for some of it.

But that doesn't stop the inexorable march of depletion. It seems that whatever we thought was normal in 2007 won't be so normal in 2017, 2022, or 2027, which is only 15 years away. Somewhere in the middle of those years, the folks selling us the oil in the first place may decide that it is not in their best interest to keep selling that oil as fast as possible; or perhaps production declines accelerate... the point is is that it appears Peak Oil consumption has hit the U.S. and there isn't much we can do about it. We must  make personal, policy, and economic adjustments. Some will make better decisions than others, and the government's capacities will likely be much diminished... for what its worth, I view that outcome as very, very good news.