The Oil Drum

29 comments on Why Oil Intensity Changed in the US Economy

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louGrinzo on October 21, 2005 - 10:02am

"So to me this would imply that if we were to have another series of oil shocks like we did in the 1970s, and thus we desired to get another 50% reduction in oil intensity out of the economy, Dr Greenspan is saying that would be easier now that it was then. He's got to be wrong."

IMO, that's also not what Greenspan was saying. He didn't say anything about using energy more efficiently; he was narrowly addressing the impact on growth and inflation. That's a far simpler point that is the issue of how hard it would be to further reduce the economy's ovetrall oil intensity.

"And since we seem to have been remarkably resistant to behavioral changes, presumably we'd pretty much have to find the transportation part in increased vehicle fuel efficiency, or else economic contraction if we can't get efficient fast enough. I don't think that's going to be easier at all."

If our choices are reduced miles (via contraction) or reduced miles per gallon, then yes, it will definitely be hard to get an additional significant improvement. But we're not limited to those two choices, as we have non-petroleum fuel sources: Ethanol, biodiesel, and electricity generated 95% by coal, hydro, nuclear, etc. Those are very small contributors to our transportation needs today, but that will very likely change in just a few years.

The jump to electric vehicles will be especially notable, since they completely shift marginal (meaning per-mile) transportation energy demand from oil to non-oil sources. I think that with Mitsubishi selling a Colt EV in 2010, as they claim, we'll see people jump very quickly from gasoline vehicles to electric cars, at least for their commuting and around-town vehicle(s) in >1 car households.

In general, I think we're headed for a much more diversified energy infrastructure, right down to the consumer level, with a mix of gasoline, diesel, ethanol, biodiesel, conventional, hybrid, plug-in hybrid, and all-electric vehicles in the field for a long time.

Please don't think I'm arguing with you, Stuart. I think you're doing a great job with these analyses, and you're providing a much needed service to the readers of this site. Even though I think it's VERY important that we use statistics to understand our past and present situation, I think we also have to be careful about how we use that information to extrapolate into the future. The real world has a very nasty habit of not following even the most logically and meticulously constructed, and best researched plans. (And I have the scars, both metaphorical and literal, to prove it!)

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Stuart Staniford on October 21, 2005 - 3:04pm

I guess my point (as I made above) is that oil shocks come in natural units of supply percentage (specifically that of the country involved) and an oil shock would be harder now than before.

You're allowed to argue with me Lou ;-)

I generally agree with EP about the plugin hybrid being the path of least resistance. I think the only limitation is the fleet turnover rate is not that high, new model turnover rate is not that high, and I think they'll get lower, not higher, in a serious oil shock or post-peak type scenario (when the economy goes is to hell is exactly the time people do not choose to buy a new car. Instead they lose their job and stay home more). So I don't think we can do much better than about 4% annual reduction in oil usage that way. We managed an average 3.2% annual improvement in car fuel economy from 1979 to 1991.

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Engineer-Poet on October 21, 2005 - 8:00pm

This is one place where government policy might help.

My preliminary analysis shows that it's possible to build a small electric vehicle (tandem two-seater, Cd=0.3) with a range of 100 miles or more. Cost should be relatively low; the batteries would cost less than $1000. If government offered low-interest loans for the purchase of such vehicles and allowed insurance and licensing to be free if combined with an existing non-electric vehicle that would never be used at the same time, people would not have to spend a great deal of money or use any fuel to get to work. People would be able to afford to take such jobs, and the reduction in oil expenditures might pay for the subsidy.

Something to think about.

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Stuart Staniford on October 21, 2005 - 8:48pm

I agree in extremis it would take government action of this kind to keep things going.

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Engineer-Poet on October 22, 2005 - 7:58am

By substituting domestic electricity for petroleum and boosting manufacturing, such a measure might pay for itself in increased tax revenue. That's before considering the benefits in reduced pollution, congestion (cycles can ride two abreast in a single lane, effectively doubling capacity), parking...

We may not want to wait. Encouraging these things now might make a huge amount of sense.