The happy prospect of peak gasoline demand

Maybe we aren't doomed after all. Exxon's CEO suggests Americans are permanently losing their thirst for gas


Andrew Leonard
October 2, 2009 8:46PM (UTC)

Did U.S. gasoline demand really peak in 2007? According to Reuters, that's what Exxon CEO Rex Tillerson said earlier this week at an Economic Club of Washington dinner.

"We think going forward that because of the emphasis on energy efficiency, ongoing improvements in vehicle miles standards and hybrid (cars), that motor vehicle gasoline demand is down, is headed down, and is going to continue to head down," said Tillerson.

The implications of Tillerson's forecast, if it pans out, are extraordinary. A peak in gasoline demand in the U.S. implies that mature developed economies may reach a stage where their hunger for transportation fuels does not continue to expand indefinitely. Gasoline accounts for a whopping 45 percent of all oil consumption in the United States, according to the Energy Information Agency. So if gasoline demand peaks, we're nearly halfway to a peak in overall oil demand. And what that means -- if the principles of conservation and energy efficiency are applied all across the energy-consuming economy on a consistent ongoing basis, is that we might not be as disastrously hobbled by the threat of a supply peak as some of the more downbeat peak oil futurists fear.

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Which is not to say that, globally speaking, we are anywhere near close to a global peak in gasoline demand. China and India are a long, long way from reaching that promised land, and it seems reasonable to assume that a massive expansion in car ownership in both countries will push the global oil supply-and-demand equation to the breaking point in the not-too-distant future. But there's also the possibility that China and India might learn from the West's example, and push much more aggressively for higher fuel economy standards, energy efficiency, and the rollout of hybrid and electric cars than the United States did.

But we'll see. The one factor in depressed demand that I did not see Tillerson mention, at least as reported by Reuters, was the down economy. The true test of his thesis will come when real economic growth returns. If the 2007 peak holds even in the face of a healthy economy, then we'll know the Exxon CEO is on to something.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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