Demand destruction in the UK means changing a lightbulb. Demand destruction in a poor country means doing without light.

Did other countries increases make up for the drop in use ?

I guess the percentages your giving don't make it clear what the absolute numbers are. I think your saying that the larges absolute drops in usage have been in the more developed countries thus the higher percentages. For the less developed world it probably more interesting to look at countries with and without subsidies. I think the reason they have not been hit hard yet in general is because they are either oil producers or have subsidies in place that have not been revoked. This will eventually change.

So subsidies are currently distorting to usage picture however from my reading the per capita usage is low in most of the third world countries anyway so even if the subsidies are removed and usage declines the absolute change is fairly small.

Also of interest is the usage patterns in the poorer countries oil is generally used for commerce not personal transportation so we would expect the numbers to be sticky.

What we have seen reported in the press is that these countries are having trouble actually purchasing oil and oil products so are seeing periodic shortages. A short term shortage condition would probably not dramatically change the overall usage.

Also in looking at the charts it seems a drop in Fuel Oil usage played a big role in the US for example its -26.1%

For the world -2.5% OECD -8.7%

What I think has happened is that we have upgraded a lot of our refineries and are producing less fuel oil per barrel sending up the cost for fuel oil. In general fuel oil is the one use case that can often be replaced with coal or NG usage. As far as I know NG usage has gone up worldwide.

So in my opinion whats happened is we have had substitution and thus removal of a lot of existing fuel oil usage. And at the same time better refining so less fuel oil produced. At some point this will no longer help.

As may have been stated before, many of the countries showing demand increases are subsidizing the fuel costs for average citizens. At this price level, strain is placed on subsidizing countries to lift part or all of the subsidized expense.

In this case, subsidies do two things:

1. Artificially stimulate demand in the face of struggling supply.
2. Create strange distortions in a high price environment.

In the end, subsidizing countries will face shortages and rationing in a constrained supply situation. Those without subsidies suffer demand destruction.

In non-subsidized nations, you will see a rise in efficiency as systems are put into place to deal with increased costs. In subsidized nations who import a substantial portion of their oil, long term shortages will cause a destructive period of shocks to economies and efficiency gains will be delayed. In a final case, subsidies in producing nations will further constrain supply for importing countries resulting in increased geopolitical tension between producers and consumers.

I think the trends will be complicated by different levels of fuel saving. I'd suggest there are at least 3 thresholds;

Level 1 discretionary cuts or painless savings ie fewer shopping trips, less recreational travel.

Level 2 crossing the comfort zone such as car downsizing or taking the bus, perhaps reluctantly.

Level 3 acute financial hardship such as a cut in income (eg job layoff) or budget reallocation due to loan repayments or expensive groceries.

The question is whether the third type is going to put a ceiling on oil prices eg $200 per barrel.

When you look at the top ten reductions, you get a different picture:

1. -11.9% Indonesia
2. -10.7% Azerbaijan
3. -10.4% Kuwait
4. -5.5% Iceland
5. -4.7% Turkey
6. -4.3% Hong Kong
7. -4.0% Finland
8. -3.9% Peru
9. -3.3% Japan
10. -2.4% Egypt

While these might not be the most obvious expected cases (eg Bangladesh = +1.7%) there is generally an explanation for why.

Its also important to note that the key factor is easily disposable income in the driving classes - not absolute wealth. That's why I suggest high debt countries will low oil taxes will be hit early on (such as the US).

Demand Destruction down in the outback.

I am currently using LP gas to heat with. I use it conservatively as well. In the last 6 weeks I used exactly 250 lbs. At about 4.5 lbs /gal thats about 55.5 gals.

I paid $132 for that amount. This is from a guy who used to deliver a lot of LP locally in this area but no longer does yet he will sell you some to fill portable cylinders with.

I did own my own 500 gal tank and filled it more reasonably but its gone now so I use smaller tanks.

Last summer around Sept I asked my previous supplier for the price and he quoted me $1.97 if your own tank. $2.07 if his tank. He will sell you a tank for $850 or rent one for free on contract. I demurred on that..for he looked far far too hungry and lean. I caught on to his lame schtick right off.

Two days ago I refilled my RV size cylinders and the price was the same as before and this was not from my previous supplier since they will definitely refill small tanks. The guy I got this LP from was on a forward contract and his delivered price had therefore not changed of late. Next year? Likely a whole lot higher. He uses a lot for his chicken houses. Takes a lot to heat those huge structures.

There was a big changeover in the type of valves used and now many tanks are not compliant anymore. Big hassle there.

Now when I filled my tanks two days ago the guy told me that the suppliers are now testing peoples lines from the tank to the house and even though you own your own tank(500-1000 gal) if they find a leak(even though there may not be a real leak) they will not fill your tank!

And he said that the some residents had told him that when they tried to buy from other suppliers that they were quoted prices ranging from $2.65 to $2.85...a huge increase since this last Sept.

So I figure the suppliers are tightening their customers up substantially for some reason. Perhaps to make more profit and demand higher prices. That sort of cutthroat business is becoming more pervasive of late in all forms of business IMO.

That supplier made a list of all that I had to do in order to get my own tank and have them service it. Before this last summer I never had any hassles. Not a one. They fired the old driver they told me and now a bunch of young sheiks are running the place and I think all they can think of is $$$$$ signs.

So here then is my part of Demand Destruction written in bold.

I will convert all the way to wood. First for heating and later for cooking. Then they can kiss my ass and I will have done my part to reduce FF consumption.

The wood I will be burning is mostly deadfall or what I pick up from trees fallen over on cropland and other here and there as well as thinning out my own woods as need be. I intend to concentrate on maple since its fast growing and there is a lot of it to thin out plus its dense.

I have 4 or 5 chains saw and many good double bit axes as well as mauls,wedges, etc. I used to cut a lot of my own firewood in the past. For my cooking I am getting a wood fired range and building an outdoor Pompeii style masonry oven on my back screened in porch where I will also have my fish cooker and bbq smoker. Non-gas fired.

I suggest those who look to the future find some good land with lots of woodland on it and think seriously about doing their part for 'demand destruction'.

airdale

is the picture somewhat more complex?

Euan,

(C+C+NGL) is only part of the story.

I think you need to look at total primary energy supply to see if substitution is going on.

Or, if just considering oil, at least also consider the bit which makes up the difference to total liquids - availability (or not) in each country of these 'crude alternates' are the marginal barrels determining the price and consumption of 'conventional' crude.

I'll take my techno fix with fries please.

New energy uses for asphalt
http://news.yahoo.com/s/ap/solar_roads;_ylt=ApuDgDZXFRlQkd.nho4n4GcDW7oF

But it is only in the last decade that researchers have begun raising the efficiency of photovoltaic cells to economically generate electricity, and new technologies aim to make them commercially competitive without subsidies from taxpayers.

Experimental technologies involve new methods to concentrate the sun's energy by using mirrors or lenses, or devices that track the sun's path across the sky. New materials are being developed to make better cells. And scientists are working with electrochemical cells using a liquid rather than a solid component to absorb light.

"The prospect of relying on the sun for all our power demands is finally becoming realistic," says report in New Scientist.

PO means that oil prices will go higher and stay there probably for longer than most think. higher prices boost all the solutions we have.

we still have old fashioned solutions.

1. Using more efficiently- buying a higher MPG car, hybrid or a PHEV.

2. Not using as much- walking, biking and car pooling more.

3. Not using at all- getting rid of the car.

Year on year numbers can be somewhat misleading, since oil is used in heating and power production as well. Both of these can have relatively large yearly fluctuations despite their smallish overall contribution. These fluctuations depend on coldness of the winter and other factors. However, for many countries the drop seems to be significant enough that it can't be explained by those factors (and of course a country might have had an increase in the use of heating oil in 2005-2006 with a drop in the overall oil consumption). In my opinion ground transportation fuel consumption would give a more reliable picture of possible trends.

So are we seeing demand destruction in OECD countries, or are we exporting heavy industry from rich countries to poor ones (along with the energy requirements)?

Mike

Those of you that have travelled in 3rd World Countries may remember how some of the countries have very bad roads. People drive older vehicles that have their suspensions beefed up, newer models with off road suspensions, and motorcycles. Some of the cities have some good roads and you therefore may see somewhat less capable off road vehicles. Two wheel drives in many areas are fine, as long as they are bad road capable.

I sincerely think that some of the vehicles people are buying could be the worst for bad roads. Many of these vehicles can have their suspensions beefed up. I wonder how the fuel cells will handle rough
road conditions?

The data relates to countries and tries to suggest that the wealthy are being more impacted by high oil prices than the poor. But the data does not and probably can not distinguish within a given country as between poor and not poor people. So the point cannot really be made using this data. It could be that the poor people in wealthy countries are the ones whose demand is primarily being destroyed. It may also be, as suggested in some comments, that oil price subsidies in some poor countries are skewing results because their demand is not impacted by higher global market prices. This is a topic that needs a lot more data.

Someone pointed out the difference between demand destruction and affordability destruction. Demand destruction says that I do not need it any more. I found a substitute or it is not necessary nor desired. Affordability destruction says that I still want it, I just can not afford it. There is a difference.

http://www.nytimes.com/2008/01/02/opinion/02diamond.html?_r=1&ref=opinio...
OP-ED CONTRIBUTOR
What’s Your Consumption Factor?
By JARED DIAMOND
Published: January 2, 2008

TO mathematicians, 32 is an interesting number: it’s 2 raised to the fifth power, 2 times 2 times 2 times 2 times 2. To economists, 32 is even more special, because it measures the difference in lifestyles between the first world and the developing world. The average rates at which people consume resources like oil and metals, and produce wastes like plastics and greenhouse gases, are about 32 times higher in North America, Western Europe, Japan and Australia than they are in the developing world. That factor of 32 has big consequences.

Good points.

A couple of possible reasons for this picture:

1) Oil intensity in OECD countries is much lower than in developing/non-OECD countries, which results in stronger substitution in OECD.

2) Oil products are subsidised in "demand-spots", such as China/India and the Middle East, which together will account for the vast part of the demand growth in coming years. Subsidies result in unchanged demand patterns.

3) The oil shock in 1979-80 was a "shock", i.e. it was very sudden compared to the rise in 2007.

On average, WTI rose by (a rounded) 19% in 2003, 33% in 2004, 36% in 2005 and 17% in 2006. Comparing the demand growth between 2000-2005 and 2005-2007, it becomes clear, that high prices between 2000-2005 started affecting demand growth negatively with a lag of 2-4 years. Demand growth between 2000-2005 was much stronger than last 2 years.

Regards,
Cüneyt

Over the past few months I've been working to develop an oil depletion model for the US and Canada (at www.dynamiccities.org) that can be used as an infrastructure planning tool. To those ends, I've been wrestling with some of the distinctions between global peaking and decline rates versus what might be experienced in individual nations.

In particular I've been making the assumption that demand destruction in poorer countries will roughly offset declining net exports such that the US and Canadian experience will be fairly close to that of the world on average.

This assumption contrasts our experience with the experience of poorer countries - who will peak earlier and decline faster while, on the other end of the spectrum, some OPEC countries will likely experience a long plateau in subsidized domestic oil consumption.

Any thoughts on the respective impacts of demand destruction vs. declining net exports?

In the early stages of oil scarcity demand destruction result from conservation, whether voluntary or forced. In the middle stages demand destruction will result from deprivation. In the later stages demand destruction will result from deaths.

Somehow demand destruction does not seem to adequately convey the reality of what now is or is to come.