Peak Oil Supply Or Peak Oil Consumption?

'Peak oil' refers to a belief that growing oil demand will outstrip finite oil supplies. Peak U.S. oil consumption is premised on the belief that 2007 marked the peak, population increase notwithstanding, due to efficiency, biofuels and batteries.
April 20, 2009, 10am PDT | Irvin Dawid
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"Drivers filled their cars with 371.2 million gallons of petroleum-based gasoline every day in 2007, according to the U.S. Energy Information Administration. It expects that to fall 6.9% to 345.7 million gallons in 2009, as demand at the pump declines and the use of plant-based ethanol increases. Even if usage climbs after the recession ends, it won't exceed 2007 levels, according to EIA forecast.

Demand for all petroleum-based transportation fuels -- gasoline, diesel and jet fuel -- fell 7.1% last year, according to the U.S. EIA. This is the steepest one-year decline since at least 1950, as far back as the federal government has reliable data.

Many industry observers have become convinced the drop in consumption won't reverse even when economic growth resumes. In December, the EIA said gasoline consumption by U.S. drivers had peaked, in part because of growing consumer interest in fuel efficiency.

Exxon believes U.S. fuel demand to keep cars, SUVs and pickups moving will shrink 22% between now and 2030. "We are probably at or very near a peak in terms of light-duty gasoline demand," says Scott Nauman, Exxon's head of energy forecasting.

Skeptics of the notion that gasoline demand has peaked point to a population that is likely to keep growing as Americans have children at roughly the same pace and the flow of immigrants increases. "Anyone who looks at population must think there is going to be some big bird flu if they think we've peaked," says Tom Kloza, chief analyst at Oil Price Information Service, a firm in Wall, N.J., that tracks prices and consumption."

Thanks to Mark Boshnack

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Published on Monday, April 13, 2009 in The Wall Street Journal
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