Undertaking an energy “diet”

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U.S. companies and consumers alike are seeking to slim down in terms of energy consumption these days, according to data gleaned from several different sources (including surveys … but you knew that already, didn’t you?!)

This is a very good trend line, especially from where I sit, especially in terms of oil consumption patterns as far less petroleum is being imported by the U.S. compared to seven years ago, now mainly from countries in the Western Hemisphere versus the Middle East.

First, though, let’s look at the overall energy consumption picture painted recently by the Deloitte Center for Energy Solutions, a division of global consulting firm Deloitte LLP. According to the firm’s annual reSources survey, businesses are leading the way into this new era of “energy frugality,” noted Marlene Motyka, U.S. alternative energy leader at Deloitte, by targeting average reductions in energy consumption of nearly 25% over a three- to four-year period.

Consumers are also doubling down on efficiency, too, she noted, with 83% reporting that they took extra steps to reduce their electric bill over the past year and 93% saying they will use the same amount of electricity or less in the future.

"The recession is profoundly changing energy habits for both businesses and consumers," noted Greg Aliff, one of the survey's authors and a vice chairman in the energy & resources sector at Deloitte LLP. "Using less may be the new normal, from boardroom tables to the kitchen tables."

This year’s survey, reSources 2012, also found that 9 out of 10 companies have set goals regarding electricity usage and energy management practices with 66% identifying cost-cutting as their primary motivation.

Moreover, Deloitte’s survey indicates 85% of businesses view reducing electricity costs as essential to staying financially competitive, a 9% jump from 2011, with 81% viewing efforts to reduce electricity costs as essential to their image, 11 percentage points over last year.

Yet Deloitte’s Motyka stressed that these new energy goals are linked to the bottom line and are not simply just corporate “window dressing.”

"Companies are making significant energy-efficiency progress, reporting that they have achieved about 60% of their targets for energy savings when it comes to electricity, natural gas, carbon footprint and transport fleets,” she pointed out.

“Yet it is going to get tougher,” Mootkya added. “Well over half (62%) of the companies surveyed report their energy management goals were somewhat difficult to achieve. Moreover, 21% say their energy management goals were very or extremely difficult to achieve compared to 13% in the 2011 survey. The low-hanging fruit may have already been picked when it comes to energy efficiency."

Yet picking off such “low hanging fruit” is working when it comes to oil consumption. The Energy Information Administration (EIA), for one, recently noted that the U.S. consumed 18.8 million barrels per day (MMbd) of petroleum products during 2011.

While that still makes us the largest petroleum consumer on the planet, we only imported 11.4 MMbd of crude oil and refined petroleum products last year while exporting 2.9 MMbd – meaning net imports (imports minus exports) equaled 8.4 MMbd, meaning we only important the end of the day about 45% of the petroleum we use, down from nearly 65% back in 2005.

“This trend is the result of a variety of factors including a decline in consumption and shifts in supply patterns,” EIA noted. “The economic downturn after the financial crisis of 2008, improvements in efficiency, changes in consumer behavior and patterns of economic growth, all contributed to the decline in petroleum consumption. At the same time, increased use of domestic biofuels (ethanol and biodiesel), and strong gains in domestic production of crude oil and natural gas plant liquids expanded domestic supplies and reduced the need for imports.”

Here’s another nice surprise in the oil picture for our nation: some 52% of U.S. crude oil and petroleum products imports came from the Western Hemisphere (North, South, and Central America, and the Caribbean including U.S. territories) during 2011, the agency said.

About 22% of U.S. imports of crude oil and petroleum products came from the Persian Gulf countries of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates, with the largest sources of net crude oil and petroleum product imports being Canada and Saudi Arabia. Here are our top five suppliers:

Canada (29%)

Saudi Arabia (14%)

Venezuela (11%)

Nigeria (10%)

Mexico (8%)

One reason oil imports continue to fall is that we as a nation are being smarter about travel. Look at the upcoming Memorial Day holiday, for example: AAA projects 34.8 million Americans will travel 50 miles or more from home during the Memorial Day holiday weekend – defined as Thursday, May 24 to Monday, May 28 – which is just a measly increase of 1.2% (some 500,000 travelers) from last year.

While the automobile will retain its dominance as the mode of Memorial Day holiday travel choice for some 30.7 million (up 1.2% for 2011), according to AAA’s survey of traveler intentions, the average distance traveled by car is expected to be 642 miles, which is 150 miles less than last year’s average.

Traffic congestion is also undergoing a startling (yet welcome!) decline in the U.S. and worldwide, noted traffic information provider INRIX.

In its fifth annual INRIX Traffic Scorecard, the company said traffic congestion dropped 30% in 2011, with 70 of America’s top 100 most populated cities registering big decreases in traffic congestion last year. The drop in U.S. traffic congestion in 2011 follows two years of modest increases in 2009 (1%) and 2010 (10%). The last time America experienced a similar decline was 2008, when traffic congestion plummeted 34%.

“These results are indicative of a ‘stop-n-go economy,’ where lack of employment combined with high fuel prices is keeping Americans off the roads,” noted Bryan Mistele, INRIX’s president and CEO. “In America, the economic recovery on Wall Street has not arrived on Main Street. Americans are driving less and spending less fueled by gas prices and a largely jobless recovery.”

When analyzed in correlation with 2011 statistics from the Federal Highway Administration (FHWA), U.S. Departments of Energy and Bureau of Labor Statistics, INRIX said its scorecard offers up some other interesting insights:

  • Cities showing the biggest drops in traffic congestion also were cities where gas prices exceeded the national average at its April 2011 peak ($3.96), including L.A. ($4.25), San Francisco ($4.25) and Honolulu ($4.48).
  • Cities outpacing national employment growth (1.2%), like Tampa (3%), Houston (3.2%) and Austin (2.1%), showed some of the biggest increases in traffic congestion.
  • Cities with moderate employment gains and fuel prices at or below the national average ($3.52) including Atlanta ($3.32, 1.2%) and Miami ($3.52, 1.2%) also showed the biggest increases in traffic.

Interesting trend lines, indeed. Let’s just hope we can stick with our “energy diet” if and when the global economy begins to pick up significant speed. 

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