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!”
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.
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