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Robert Rapier

Robert Rapier

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U.S. Gasoline Demand At All-Time High


Given all the media hype about peak oil demand — which is supposed to come about largely as a result of the explosive growth of electric vehicles (EVs) — you might be forgiven for missing the news that U.S. gasoline demand just hit a new all-time high. This new demand record comes despite EV sales that tripled in the U.S. from 2012 to 2016.

My news feed tends to be dominated by headlines like Goldman Sachs warns of peak oil demand by 2020 (even though that headline doesn’t accurately reflect what the article said). But do the facts contradict the narrative? Sensationalism dominates the news, and the idea that oil demand will begin to decline shortly is definitely sensationalistic. I believe that this is one reason oil prices remain depressed because it perpetuates expectations that oil’s days will soon be at an end.

Every Wednesday the Energy Information Administration (EIA) releases its Weekly Petroleum Status Report. Last week’s report noted that Finished Motor Gasoline supplied in the U.S. for the week ending 7/28/17 was 9.842 million barrels per day (BPD). That is a record, and not just seasonally. Last week’s gasoline demand was the highest weekly U.S. gasoline consumption on record. The top four weekly gasoline consumption numbers on record have all occurred in 2017 — not exactly what one might expect given all of the “peak demand” articles that are all the rage.

Not only are we using record amounts of gasoline in the U.S., but refiners are also exporting record amounts of crude oil and finished products — more than 3 million BPD (even though the U.S. is still a net importer of crude oil). And just to be clear, the gasoline consumption numbers reported above do not include gasoline that is exported. The EIA specifically notes Related: Dear Millennials, Big Oil Is Not Your Enemy

“Product supplied: In general, product supplied of each product in any given period is computed as follows: field production, plus refinery production, plus imports, plus unaccounted-for crude oil (plus net receipts when calculated on a PAD District basis) minus stock change, minus crude oil losses, minus refinery inputs, and minus exports.”

California is responsible for nearly half of all EV sales, with explosive growth in recent years. You might expect to at least see a decline in gasoline demand there. But gasoline demand in California has climbed each year since 2013 and is on track to rise again this year. Since 2013, gasoline demand in California has grown by 850 million gallons (~6 percent).

The reason gasoline consumption continues to increase despite the rapid growth of EVs is that the population continues to grow. I believe that this variable is generally missed by those calling for a short-term peak in oil demand. The problem is more complex than “More EVs = less oil consumption”, but that’s how it’s being treated by some analysts. Thus, as a result of this glaring blind spot, it should come as no surprise that gasoline demand trends don’t match the narrative that is being constructed.

By Robert Rapier

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  • Disgruntled on August 14 2017 said:
    "Sensationalism dominates the news", you said it, Bub. Also, fake news dominates the news, and propaganda dominates the news. Nevermind the demand numbers over there, people, just take a look at this dismal, gray day we have today. Oh, and don't forget to see the two-headed dragonman over here!

    Global population is headed for 9 billion people by 2050 (from just over 7 billion now). More and more of the underdeveloped countries are making slow, but steady, progress towards moving more and more of their populations out of poverty. This translates to more energy use by necessity. Don't worry, there's plenty of energy out there to allow for this. Is anyone against these groups having a better, healthier, more enjoyable life? It's going to take more than $45/barrel to achieve it though. That day is getting closer all the time.
  • Dan on August 14 2017 said:
    In my vacation home area everyone was commenting on the huge traffic count that keeps coming. This weekend looked like the cities must have been empty from people running from nukes from N Korea. Keep tweeting President Trump !!! Some nice travel trailers being built these days. Pull that with your EV.
  • Jhm on August 15 2017 said:
    Rapier keeps raging against a strawman. Electric vehicles need to gain 20% share of new vehicle market in US and globally to halt the growth of gasoline demand. Rapier indignantly and ignorantly looks for an EV effect long before any reasonable analysis says it would be measurable.

    So yes, EVs can keep doubling every two years for the next 8 years before halting gasoline sales. Is Rapier going to keep harping on this for the next 8 years? But within 10 years he will be forced to stop, because EVs will finally force gasoline into decline.

    I would challenge Rapier to look at diesel demand. Diesel may have already peaked in 2015. China leads the way in diesel demand reduction and electric buses may already explain 70 kb/d of decline in Chinese diesel demand.

    My outlook

    Diesel peaks by 2021
    Gasoline peaks by 2026
    Crude peaks before gasoline
  • Bill Simpson on August 18 2017 said:
    Which is exactly why, soon after global oil production begins to decline, the global economy will melt down, as it is forced to shrink from less transportation getting provided. That shrinking from not as much work being able to be done will take down the banks, as defaults skyrocket from a constantly shrinking economy. We would probably be in trouble already without recent advances in horizontal drilling and fracking. That bought us some time, maybe as long as a decade.
    The timing is the only question. My guess is sometime between 2022 and 2025 total oil production will flatten out. Governments will probably be able to prop up the financial system for a few years after global oil production peaks. Watch for crazy things, like sending people free money. That will actually work, until hyperinflation takes off, and makes paper money worthless. Then everything will collapse. Billions will starve, as even the electric grid goes down. Once that happens, it's over. Good luck. I'll be dead by then.
    I hope I'm wrong, and someone reads this decades from now, and has a good laugh.

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