Re: WP op-ed and new CEA Report: The Surprising Decline in Oil Consumption

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Already tweeted it. On Fri, Jun 19, 2015 at 12:15 PM, Furman, Jason L. < [email protected]> wrote: > Brian Deese and I have an op-ed > <http://www.washingtonpost.com/opinions/the-boon-of-reduced-oil-consumption/2015/06/18/c02c43a4-146c-11e5-9ddc-e3353542100c_story.html> > in today’s Washington Post (pasted below) that draws on a new CEA report > <https://www.whitehouse.gov/sites/default/files/docs/explaining_us_petroleum_consumption_surprise_final.pdf> > (attached) on the underappreciated surprise in the U.S. oil market: that > the consumption of petroleum was slightly lower in 2014 than in 1997 in > fact was 6.6 million barrels per day less than what was forecast in 2003. > This surprise is nearly twice the surprising increase in petroleum > production—and the consumption surprise is expected to grow over time, in > part due to policies like the heavy duty truck rule being released today by > the EPA and DOT > <http://www.nhtsa.gov/About+NHTSA/Press+Releases/2015/hd-trucks-phase-2-standards> > . > > > > > > *The boon of reduced oil consumption* > > By Brian Deese and Jason Furman > > > > The average American family is on pace to save about $700 at the pump this > year. One reason for this has been widely reported: A historic increase in > U.S. oil production has increased global supply and put downward pressure > on prices. > > > > But a potentially even more important reason has gotten far less attention > — a historic decline in the amount of oil that our economy is consuming. > Indeed, in 2014 Americans used less petroleum than they did in 1997, > despite the fact that the economy is nearly 50 percent larger than it was > 17 years ago. A new report this week by the Council of Economic Advisers > documents that this drop in consumption is one of the biggest surprises in > global oil markets in the past decade. If it continues, it will have > positive implications for our economy, our national security and our > efforts to combat climate change. > > > > After a half-century in which it generally rose, U.S. oil consumption > leveled off and has begun to decline. No one expected this development. The > Energy Information Administration (EIA), which produces some of the most > influential and well-regarded forecasts in the field, until recently > consistently projected increases in oil consumption. In fact, U.S. > consumption in 2014 was 6.4 million barrels per day below the projection it > made in 2003 — an amount greater than the oil produced by Iraq and Kuwait > combined and about twice the magnitude of the unexpected increase in U.S. > oil production. Importantly, that decline in consumption is not expected to > be just a passing phenomenon: The latest forecasts for U.S. oil consumption > through 2025 are relatively flat. > > > > > > We are already seeing the benefits of this. The drop in consumption > relative to expectations has helped reduce U.S. net imports of petroleum by > nearly half, reducing our dependence on foreign oil and our macroeconomic > vulnerability to rises and falls in the world price of oil. By reducing net > U.S. oil usage by the equivalent of about 10 percent of global production, > these developments have contributed to the decline in the global price of > oil over the past year. And the decline in the consumption of oil has > contributed to the nearly 10 percent decline in overall U.S. carbon > emissions from 2005 to 2014, one of many ways in which smart energy > policies can also be good for our efforts to mitigate climate change and > protect the health of our children. > > > > Click here for more information! > > Moreover, this is a truly American story. Over this period, we have not > seen similar declines in most other advanced economies. For example, the > percentage reduction among European economies has been roughly half of that > in the United States. > > > > So what is behind this trend and what can we do to continue it? The > majority of the decline in oil consumption has been in the transportation > sector, but the industrial, residential and commercial sectors have come in > below expectations as well. To date, about three-quarters of the decline in > the transportation sector has been due to a reduction in the number of > miles driven, which is explained not only by the fallout from the Great > Recession and gasoline prices that exceeded pre-crisis levels until > mid-2014 but also demographic shifts, such as the aging of the population > and the retirement of the baby boomers, that are likely to persist. The > other quarter of the decline is due to increased efficiency, in part > because of new rules requiring a more fuel-efficient fleet. Moreover, the > fact that we have replaced about 10 percent of our transportation fuels > with biofuels, thanks to a bipartisan law enacted by Congress in 2007, has > further reduced our reliance on imported fossil fuels. > > > > Efficiency is expected to matter even more — it is projected to account > for nearly half of the reduction in consumption in 2025 relative to past > projections — as the vehicle mileage rules continue to phase in. > > > > New policies the administration is announcing Friday to improve fuel > efficiency for heavy-duty vehicles will help build on this trend. > Heavy-duty trucks are the fastest growing component of the transportation > sector and are responsible for about one-fifth of its energy use and carbon > emissions. > > > > In addition, the president is pushing for Congress to increase our > investments in transportation infrastructure, including a 70 percent > increase in transit investments that would help reduce miles traveled by > expanding transportation options. Together with other policies to reduce > emissions from power plants, cut methane emissions from the oil and gas > sectors and phase down the use hydrofluorocarbons, this would help us hit > the U.S. goal of reducing carbon emissions by 26 percent to 28 percent > below 2005 levels by 2025 — a goal the president formalized this year as > part of our efforts to lead the world toward a global agreement on climate > change. And as the recent trends have shown, it would put to rest the idea > that we must choose between fighting climate change and growing our > economy: Improving fuel efficiency standards for cars, trucks and other > vehicles allows us to do both. > > >