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Talkin'
Gas
Brian
Trumbore
President/Editor, StocksandNews.com
Cambridge
Energy Research Associates recently released a report
titled "Gasoline and the American People." Following
are some tidbits gleaned from summaries released to
the public.
--The
average motorist used 703 gallons in 2005 - and drove
41% more miles than 25 years ago.
--In
1990 the average car was driven 10,277 miles. In 2005
this rose to 12,375 miles; 20% growth in 15 years.
--The
U.S. has 1,148 registered personal vehicles for every
1,000 licensed drivers, 700 per 1,000 in Great Britain,
608 in Japan, 208 per 1,000 in Mexico - and just 11
per 1,000 in India, and 9 per 1,000 in China.
--In
1975, just 16% of all vehicles in the U.S. were light
trucks (including SUVs and minivans). In 2005 this
had risen to 41%. Hybrid vehicles, while gaining in
popularity, make up only 1.4% of sales through November
2006.
--Americans
paid an average of $2.86 a gallon in the third quarter
of 2006. Chinese drivers paid the least among the
larger consumers, at $2.21 per gallon, and the British
the most, $6.50 per gallon. The disparity has to do
primarily with tax rates. Here in the U.S., the gas
tax is 15% of the retail price, 30% in Canada, 45%
in Japan, 61% in France, and 64% in Britain.
--Asia
now consumes more oil than North America.
--The
rate of growth in gasoline demand in America rose
1.6% per year from 1990-2004, but with the rise in
oil in 2005, the rate of growth slowed to 0.3%, with
a further 1.0% increase in 2006. As a percentage of
average household budgets, however, gasoline is 3.8%
currently, slightly above the 1960s pace of 3.4% to
3.6%. While oil prices have risen sharply over the
past 40 years, improved automotive efficiencies and
relatively low fuel tax rates have resulted in a negligible
increase compared to the overall budget.
[The
above is amazingly stable when matched against household
spending on healthcare, up from 11.2% in 1981 to 17.3%
in 2005, while food declined from 20% to 13.4% over
the same period.]
--In
the U.S., the average price of gasoline was $1.59
in 2003 but climbed to $2.30 in 2005. Through mid-November
2006, the price has averaged $2.61, with a high of
$3.00 in July. Today it is averaging around $2.25.
--As
for ethanol, it provides about 4% of total fuel consumption,
having risen from 11,000 barrels per day in 1980 to
about 350,000 bd in 2006; thanks in no small part
to a current 51-cent per gallon tax credit. But as
Cambridge Associates concludes, "Conventional ethanol
from corn is not expected to exceed 10% by volume
of total gasoline usage because of food-for-fuel tradeoffs
and ethanol's logistical challenges. This would still
be a significant number - close to a million barrels
per day. But, since ethanol provides about two-thirds
the energy as the same volume of gasoline, more volume
of ethanol is needed for every barrel of gasoline
replaced."
--The
"China growth story" was largely responsible for the
"demand shock" that hit the world in 2004 as world
consumption of crude surged by 3.1 million barrels
per day - much of it from China and the rest of Asia.
Over the previous ten years, world demand growth had
averaged 1.2 mbd. While the overall global economy
was picking up steam, China was the main factor on
the demand side. But this results not just from an
increase in motorist demand in China, but also a shortage
of electricity, which was partly solved by burning
more oil as opposed to coal to generate it.
---
Separately,
the Energy Information Administration, part of the
U.S. Department of Energy, released its "Annual Energy
Outlook 2007" (AEO2007) on December 5.
Some
conclusions:
"Despite
the projected rapid growth of biofuels and other non-
hydroelectric renewable energies and the expectation
of the first new orders for nuclear power plants in
over 25 years, oil, coal, and natural gas are nonetheless
projected to provide roughly the same 86% share of
the total U.S. primary energy supply in 2030 as they
did in 2005 absent changes in existing laws and regulations.
This reflects a situation in which rapid growth in
the use of biofuels and other non-hydro renewable
energy sources begins from a very low current share
of total energy use, the share of a growing electricity
market supplied from nuclear power falls despite projected
new plant builds, and hydroelectric power production,
which accounts for the bulk of current renewable electricity
supply, is stagnant."
AEO2007
projects that ethanol will grow from 4% of total gasoline
consumption by volume to 8% in 2030.
And
AEO2007 had some interesting takes on natural gas.
"Natural
gas consumption is projected to grow to 26.1 trillion
cubic feet (tcf) in 2030, well down from projected
consumption of 30 tcf or more that had been included
in the AEO reference case only a few years ago. Much
of this change results from projected natural gas
prices that significantly cut the expected growth
natural gas use for electricity generation over the
last decade of the projection period. In the AEO2007
reference case, overall natural gas consumption is
almost flat between 2020 and 2030, as growth in residential,
commercial and industrial consumption over this period
is nearly offset by a decline in projected gas use
for electricity generation."
Why?
"Coal
is projected to play a growing role in the AEO2007
reference case, particularly for electricity generation.
Coal consumption is projected to increase from 22.9
quadrillion British thermal units (quads) in 2005
to over 34 quads in 2030, with significant additions
of new coal-fired generation capacity over the last
decade of the projection period. *The projections
for coal use are particularly sensitive to the underlying
assumption for the reference case analysis that current
energy and environmental policies remain unchanged
throughout the projection period."
Coal
remains the primary fuel for electricity generation.
The coal share of generation increases from 50% in
2005 to 57% in 2030. The natural gas share of generation
increases from 19% in 2005 to 22% in 2016, before
falling to 16% in 2030.
---
Wall
Street History returns next week.
Brian
Trumbore
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