Oil Usage Drops in Developed Nations in 2006

Thank you to the millions that used less oil in 2006. For the first time in 20 years, the International Energy Agency show oil consumption in the 30 member countries of the Organization for Economic Cooperation and Development fell 0.6% in 2006. The drop was slight, but most encouraging to all who seek energy independence, averting a climate crisis, and healing an economy “addicted to oil.”

Yes, global oil demand did grow in 2006, but only by 0.9% in 2006, compared to 3.9% growth in 2004 and 1.5% in 2005. Oil demand may be moderating for a number of reasons including these:

1. When oil prices rose, demand shifted to more energy efficiency.
2. Some vehicles have become more fuel efficient by reducing vehicle weight, air and road resistance, and by using hybrid technology.
3. Less heating oil was needed due to global warming.
4. The Kyoto Protocol is starting to work.
5. Biofuels are increasingly used to substitute for fuels refined from oil.
6. Clean distributed energy and more reliable grids reduced the usage of diesel generators, propane and butane.
7. The ratio of people living in cities increased relative to suburbs. Oil demand per person is less in cities due to effective public transit and closer proximity of home and work. The U.N. forecasts that 80% of people will live in cities by 2050.
8. More people are riding together with car pooling and public transit.
9. Trucks and buses are reducing the wasteful idling that keeps engines running up to 40% more than is necessary. Use of auxiliary power units are increasing.
10. People spend more time working and shopping at home, using broadband Internet services.

Neal Dikeman commented on the OECD drop, “That really is huge news. Supply and demand economics does work after all, despite what some people may think. Historically, new supply discoveries drove price declines (in the 1st half of the century). Since OPEC however, supply shocks and constraints have driven major price increases, and overestimated demand / negative demand shocks have driven declines.” Mr. Dikeman is a merchant banker, originally from Houston, Texas, and now a partner with Jane Capital.

Moderation of oil usage is timely. Next week, the first phase of the Intergovernmental Panel on Climate Change will be released. This will be a major update from the respected 2001 report that involved hundreds of leading scientists globally. “The smoking gun is definitely lying on the table as we speak,” said top U.S. climate scientist Jerry Mahlman, who reviewed all 1,600 pages of the first segment of a giant four-part report. “The evidence … is compelling.” CNN Report

As the oil reduction numbers are analyzed a picture may emerge about how to continue our path to a brighter future. To all of you who conserved – Thank You!