“U.S. consumption of liquid fuels and other petroleum [products] are expected to decline in 2008 by about 190,000 barrels per day as a result of the economic slowdown and high petroleum prices.” -from the Energy Information Administration‘s short-term energy outlook published May 6.
With diesel fuel at over four dollars a gallon throughout much of the U.S. - hitting the $5 mark in California - and gasoline pricing not far behind, it would seem a big stretch to even bring up the term “silver lining.” Yet besides record-setting pump and oil prices (which closed above the $128 per barrel mark yesterday) there‘s another statistic to consider as well - the first reduction in U.S. imports in 30 years.
(Photo courtesy of the Penn Jersey Truckstop)
True, the drop is pretty small: According to the Energy Information Administration (EIA), the U.S. imported 57.9% of its oil in the first quarter this year, down from 58.2% over the same period in 2007. Yet that 3/10ths of 1% marks the first time since 1977 that this country reduced oil imports - due largely to high prices and the current U.S. economic slump, but also to the rising use of ethanol, biodiesel and other biofuel products, along with higher average vehicle fuel economy, noted Guy Caruso, the EIA‘s administrator.
Caruso‘s agency also recorded these statistics: while world oil consumption is projected to grow by 1.2 million barrels per day (bbl/d) in 2008, after accounting for increased ethanol use, U.S. petroleum consumption is projected to fall by 330,000 bbl/d this year. By 2015, if these trend lines hold, the EIA projects U.S. petroleum imports could drop to 50% of all oil consumed.
I know, I know: none of this provides much relief to the wallets of truckers rapidly being emptied at the refueling island. And the way things are shaping up, truckers should expect to keep paying some steep prices for diesel in the coming months.
(Photo courtesy of Petro Stopping Centers.)
“The oil supply system continues to operate at near capacity and remains vulnerable to both actual and perceived supply disruptions,” said the EIA last week. “The supply and demand balance for the remainder of the year is tighter. World oil markets are particularly tight during the first half of 2008, with year-over-year growth in world oil consumption outstripping growth in non-Organization of the Petroleum Exporting Countries (OPEC) production by over 1 million bbl/d. The combination of rising global demand, fairly normal seasonal inventory patterns, slow gains in non-OPEC supply, and low levels of available surplus production capacity is providing firm support for prices. The flow of investment money into commodities markets and ongoing geopolitical concerns in a number of producing countries, including Nigeria, Iraq, and Venezuela, have contributed to crude oil price volatility.”
However, consider these numbers, gleaned from Jim Angel and Fred Hammer‘s recent presentation at the National Private Truck Council‘s (NPTC) annual convention last month: In 2007, the total cost of diesel fuel used to move freight totaled $112.5 billion for the trucking industry ... yet shippers paid over $65 billion in fuel surcharges last year.
That meant truckers paid out $47.5 billion for fuel, which is lower than the $53 billion it shelled out for fuel in 2003. It‘s not cause for a party (for $47-plus billion out of pocket is a wallop on the bottom line no matter how you look at it) but it‘s easier than footing a nearly $113 billion tab let me tell you.
Fred Hammer, corporate transportation manager for Shopko Stores - a grocery chain based out of Wisconsin that operates 38 tractors and 400 trailers - also noted that high prices are driving fuel conservation efforts like never before at his fleet and many, many others. By really focusing on a broad fuel savings strategy - which includes efforts to reduce deadhead miles, analyze vehicle performance to boost miles per gallon and decrease idle time, offer drivers incentives to reduce fuel consumption, plus cut down out of route miles and boost vehicle productivity, Shopko cut its fuel expenditures by 9.5%. If fleets continue to reduce fuel consumption metrics like this across the industry, oil imports - especially from nations hostile to us such as Iran, Saudi Arabia, Nigeria, and Venezuela - will continue to fall.
Of course, there‘s also a lot of speculation going on in the global oil market right now, too, not unlike what happened in the U.S. housing market, which is adding to the big price increases we‘re seeing. If that bubble collapses, leading to oil pricing drops and thus lower fuel costs, we need to make certain we don‘t revert to our oil, fuel-guzzling ways. The EIA, for example, predicts that we will return to slurping behavior, as it believe by 2030 imports will make up 54% of all the oil the U.S. consumes, despite falling to 50% in 2015. We must make sure that once we pass the fuel spikes of today, we don‘t end up back in the same old habits tomorrow. We‘ll see what happens.