The views of boborojo.

Tuesday, April 10, 2007

Who consumes the world's oil?

I run into charts of "who uses how much of the world's oil" from time to time, and I will collect these here to see how it sorts out over time.

Matthew Simmons
First data set is from Matthew R. Simmons, who runs the consulting firm Simmons & Company International. This particular data set is pulled from his presentation Oct 2006 to Harvard Business Schoolhis , on slide #7. The only thing missing: when was this data collected?

26% United States
7.0% Japan
6.0% China
3.6% Germany
3.3% Russia
2.8% Brazil
2.8% South Korea
2.7% Canada
2.6% France
2.6% India
2.6% Mexico
2.4% Italy
2.2% United Kingdom
1.9% Spain
1.7% Saudi Arabia
1.4% Iran
1.3% Indonesia
1.1% Australia
1.1% Netherlands
1.1% Taiwan
23% The Rest of the World

General Comments on Peak Oil
If you have not read Simmons before, do check him out. I am reading his book, "Twilight in the Desert" (Wiley 2005). Or, at his web site (see above) you'll find a slew of presentations, free. In terms of outlook, Simmons is clearly an "oil bear" in the sense that he believes (1) an oil production decline is imminent (i.e. is happening now) and (2) the peak daily production rate has been achieved (or nearly so) from the worlds largest producing fields. All this, in the face of increasing demand. This means there are interesting times ahead in the form of declining production, finite supply, supply squeezes, and the inevitable follow-ons: higher prices, shortages. I can only conclude that other nasty things will inevitably follow: political and economic extortion, wars for oil, supply disruptions, maladies for those who consume a lot, and constraints on growth for rising nations. Fun stuff.

If you look at China and India as the world's rising economies, note that their combined consumption (13% of world supply) is still half of that in the U.S. (26%). It is tempting to conclude, with annual GDP growth rates in China in the range 10 to 15% for over a decade with no slowing in sight [need citation and corrections], you can conclude that some kind of "pull" will come to some kind of shoving match as we line up to eat this finite-sized pie of resource.

I would guess these two nations would make any number of back room deals to get at a larger share of the resources. Remember the Chinese Premier's visit to the U.S., I think 2005, the one where his first stop in the U.S. was to see Bill Gates and tour the Seattle Boeing plant, then to see Bush, then to see some oil-rich nations in Africa? And then he traveled to the Middle East; and was Venezuela on his itinerary? I forget. He was not putting on these miles to collect souveniers.

I try to imagine what arguments would refute Simmons work, and come up lacking. One item I take away is that the super-big oil and gas fields have basically been all discovered, and *iff* we don't have any mega-discoveries from here on out, then the hypothesis (of declining production in existing mega-fields) holds. If there is some nation or entity that is sitting on some secret reserves that are not on Simmons' radar, it weakens his thesis only because it postpones the inevitable decline in production of a finite resource. Nothing invalidates the basic fact that oil/gas is a finite resource. And many of us are use oil like there will be an ample-oil tommorrow.

If you were to just want to ask the question, "have we already reached the point of peak production," (or, "are we there yet") you miss the point. Many have pointed out that the effects of "peak oil" do not occur when the next-to-last drop is pulled from the ground.