The continuing demise of US fuel oil consumption

When commentators talk about the US cutting its oil consumption, they often cite the reductions in usage that were spurred by the first oil shock in 1973-1974. “See,” they say. “We did it back then, and we can do it again!”

resid

What they often fail to note is that one of the ways in which the US did dial back on its oil consumption is by drastically changing over its use of fuel oil for electricity generation to lots of other things: coal, natural gas, nuclear, alternatives. In 40 years, there have been plenty of things.

But the fact is if you’ve all but zeroed out your consumption of fuel oil, you can only do that once. That’s why the whole “we can do it again!” comes up short.

The zeroing-out of fuel oil consumption in the US never did stop. And as John-Laurent Tronche of Platts’ Houston office noted after looking at this week’s Energy Information Administration report, fuel oil use in the US has never been lower: 154,000 b/d in the week ended April 11.

As John-Laurent reported:

  • Last week’s number was not an anomaly: the 10 lowest weekly demand figures came within the past seven months.
  • Even within that now small consumption area — remember, that’s out of total products supplied of about 18.4 million b/d — electricity is only a small part. For example, electricity generation accounted for less than 10% of fuel oil use in 2012. Less than a decade earlier, it was closer to 50%.
  • Most of it is being used as bunker fuel. But with tighter sulfur rules for ships kicking in over the next few years, that is going to be displaced by everything from LNG to marine diesel. Only onboard scrubbers can possibly hold on to that market for fuel oil.

Pictured above is what decades of moving away from fuel oil has wrought, graphically. And this data only goes back to 1991; there is other data that shows fuel oil consumption was between 2.5 and 3 million b/d in the era when the first oil shock hit.


Request a free trial of: Oilgram News Oilgram News
Oilgram News Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
Request a trial to Oilgram News

Share this:
Facebook Twitter Email

All blog comments are moderated before being published.

Comments

  1. Sheetal Diyaware at May 13, 2014 8:24 am

    You give a great observation about fuel oil consumption. Your information is valuable for us.

     
  2. Simon Jacques at April 22, 2014 3:10 pm

    Most of it is being used as bunker fuel. But with tighter sulfur rules for ships kicking in over the next few years, that is going to be displaced by everything from LNG to marine diesel. Only onboard scrubbers can possibly hold on to that market for fuel oil.

    I don’t think scrubbers are the solution, LNG maybe but in the very long term.
    In the immediate term.
    I think the refining sector is looking to supply existing distillate fuels (MGO, MDO) to meet sulfur caps not LSFO but this brings another set of problems: low viscosity, low lubricity, low flashpoint, high pour point.
    Simon

     
  3. Simon Jacques at April 20, 2014 5:51 pm

    Excellent observation by Ronald. What are these numbers ? Clear that FO used as feedstocks aren’t in the EIA numbers, clear also that they don’t take in consideration blending in Houston. EIA FO demand Data shift after 2007 may be due only because of reporting issues. Ideas: exclusion of PG 52-34, PG 64-34, paving and roofing FO grades 99% similar to FO.

    FO is between oil and a oil product. The way customs and agencies treat black oils is litigious . When China became a net fuel exporter last year, it was due only to the exclusion of one type of product: Fuel Oil. The switch of China to Net Exporter was because customs excluded this product in its statistic starting this year. Chen Li, analyst with ICIS says. Conclusion is when you do your own research, most of the time it will pay well.

    Simon

     
  4. Ronald Backers at April 19, 2014 4:09 am

    John, nice blog. Out of curiosity: how much fuel oil is being used as feedstock in refineries? That’s probably not in these numbers.

     
    • John Kingston at April 19, 2014 5:54 am

      I’m not sure, but no, that would not be in there. The numbers are essentially demand numbers.

       

Your Comment