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Peak Oil and Energy Demand

If we're faced with peak oil, and energy demand stays high, how can we fix the coming energy shortfall? Short answer: We can't.

Peak Oil and Energy Demand – Managing the Coming
Energy Descent

These days, politicians are competing to see who can talk the most about alternative energy solutions—ethanol, biodiesel, hydrogen, and the like. They rarely talk about peak oil as an issue—much less about mitigation strategies—but they realize the masses have caught on to the fact that oil supplies are tightening and new energy solutions must be found.

The problem is, these political pander-bears are just telling us what we want to hear—that technology can solve the problem, that no lifestyle changes will be required, that they have it all under control, that we need not worry. This is the energy-policy equivalent of George W. Bush's infamous 2003 proclamation, "We're at war; go shopping."

When it comes to oil supplies, we should be very worried. Keeping the oil-supply curve ahead of the oil-demand curve has been possible in the last few years only because of the crashing economy and related reduction in energy demand. But the cold, hard truth is that the supply-side energy solutions so routinely proffered by politicians and pundits on both sides of the aisle cannot succeed alone. Petroleum providers simply will not be able to expand production capacity fast enough to match future demand—falling production from existing oil wells will outpace new oil discoveries. Policies that emphasize production and pay little attention to the demand side of the energy equation are setting the stage for problems on a grand scale.

Conservation measures, operational efficiency improvements, technological advances, and behavioral changes can bring down energy demand quite rapidly. There is a lot of "low-hanging fruit" that can be readily picked to reduce energy demand per capita and per unit of production. Starting to do so immediately would give us some breathing room—time to develop new technologies, new transportation modes, new energy production, and time to get comfortable with the need for a few lifestyle changes—to mitigate the full impact of the coming peak oil crisis.

Unfortunately, in the end, picking the low-hanging fruit—even picking all of the fruit on all of the trees in the energy orchard—will not enable us to avoid problems from the peaking of oil supplies unless we also reduce total consumption by a significant amount. (For more information, see the first two articles listed in the sidebar.)



  1. Peak Oil and Environment

  2. Peak Oil Solutions

  3. Peak Oil and Energy Demand

  4. The Resilient Household
(Peak Oil Survival/Preparedness)

This is Part 3 of a four-part series. You can  sign up  for the free GP email service so you don't miss any of our other great articles.


We need a massive reordering of the way we think about and use energy—individually and as a society. Business-as-usual is going to end, like it or not. We can just let that happen—and deal with the consequences when they come—or we can be proactive and start implementing solutions to ensure that ensure that our energy demand and peak oil are a compatible mix, personally, nationally, and globally.

Today's article will talk about methods of reducing energy demand with the goal of mitigating peak oil's impact on transportation fuels. We will focus primarily on four areas:

  • conservation/efficiency,
  • tax shifting,
  • relocalization, and
  • energy footprint.


Conservation and Efficiency

The good news is, many of the things that need to be done under the heading of energy conservation are about being wiser, not more austere.

Many ways to reduce oil demand also save money, including:

  • using carpools, van pools, and mass transit;
  • buying a vehicle that gets higher mileage;
  • moving closer to where you work;
  • combining trips;
  • keeping your tires inflated and your engine tuned;
  • riding a bicycle.

In some cases, you'll have to spend some money up front to save money in the long run, but if you've got money sitting in a bank or Wall Street brokerage, deploying that capital may make sense. For more, see our article on saving gas.


Look, if the offshoring vultures of US industry can figure out how to set up workers in India so they can provide tech support to American consumers, surely we can figure out how to make similar phone- and computer-based workplace arrangements for US employees who are a mere 30 or 40 miles from their company site.

From a company's perspective, the benefits of establishing telecommuting and video conferencing include better employee retention, reduced costs for office space, lower per diem travel costs, and more operational resilience.

Eliminating the need for one person to commute 60 miles round trip each day won't solve the oil problem. But eliminating that need for a few million workers would be a great start.

Government policy changes can also help. For instance:

  • Certain commuting expenses (such as downtown parking) now receive a tax break. Disallowing such tax breaks and applying them to more fuel efficient modes of commuting (such as mass transit) would reduce total commuter miles.
  • It's also time we stopped the mindless continuation of new road projects. We're at the top of the peak oil curve, and in the future, car and truck miles traveled are destined to decline. That makes new road projects a tragic misallocation of precious resources.
  • Similarly, we must replace the undisciplined approach to living known as "suburban sprawl" with walkable, bikeable communities that collocate homes, shopping, and some employment, thus allowing residents to function without complete dependence on their cars.
  • Revitalizing and expanding the US passenger rail system would go a long way toward giving people a good transportation option other than driving.

Getting started sooner rather than later on this sort of demand reduction—the low-hanging fruit—is DOT picture of passenger train essential. If implemented broadly, such solutions would contribute significantly to reducing oil demand.

In this article, we're focusing on reducing energy demand related to oil. But if we really are moving towards a fleet of plug-in hybrid vehicles, then we'll also need to free up a share of our electricity for charging those cars. Thus, electricity conservation will also be important. You can educate yourself on energy-reduction approaches for your home at d-sire, and you can learn about generating your own power at home with our article on home solar energy.

While many energy conservation technologies pay for themselves, not all do. But should that be the only test for whether to implement something? Even if a project doesn't make perfect economic sense today, it may still be a wise choice to make that investment now to avoid a problem in the future, when energy supplies will be limited. We talk more about the importance of this strategy in our article on The Resilient Household.


Tax Shifting

We have a couple of articles that discuss the concept of tax shifting (see sidebar), so we'll keep the discussion here brief. The idea is that you eliminate or reduce taxes on things that are overall positive, like people working (i.e. income taxes), and shift the tax burden to things that are overall negative, such as use of a limited, polluting resource (like oil).



Tax Shifting So Markets Tell the Ecological Truth


Global Warming & Tax Shifting

"Carbon taxes" could be one part of this equation, but to be part of a tax-shifting approach, there must be an offset to the carbon tax so that the net effect to the average taxpayer is neutral. For instance, if the government announced that it will raise the federal tax on liquid fuels 25 cents per gallon per year forever, people would quickly get the idea that using gas and diesel is going to be more and more expensive in the future, and they will shift their vehicle purchasing habits, choices about where they live and work, inefficient trips for errands, and other driving behavior. But rather than merely being a punitive new tax on top of all the other taxes we pay, the additional revenue would be fully offset by reducing federal income taxes every year by the same total amount. Energy and income taxes at the state level could be shifted in a similar, coordinated fashion.

After the tax shift, individuals would be able to choose to spend their income-tax windfall (because they're paying less in income tax) on the same dollar amount of fuel they bought previously, or they could change their energy habits and use some of the money for other things.

Tax shifting is supported by a broad majority of economists as the most effective way to deal with our fossil-fuel dependence. Tax shifting isn't complicated, but anything with the word "tax" in it starts our chicken-brained politicians running around the media barnyard spouting inanities about taxation and freedom. Ironically, the sort of tax shift we propose would be a freedom-enhancing method of dealing with our energy problem—it would give taxpayers more choice in how they spend their own money.



For the past few decades, cheap energy has been used to fuel a globalization revolution. We've enjoyed low-priced consumer goods, but overall the result has been negative. Jobs have been offshored, we've gotten more pollution, and there's been an extreme concentration of wealth for those at the helm of the globalization juggernaut.

As energy supplies tighten, the process will necessarily reverse, with fewer goods being shipped half-way across the globe and more goods being produced locally again. The more we can produce food and other goods locally, the more in sync we will be with the emerging constraints on the availability of liquid fuels to transport stuff from far away. Local production is also a good thing for food security.

For more information on how we can "go local," see our relocalization article.


As local markets become more important, you can be sure that the big multi-national retailers will attempt to take them over. Corporations have already started getting into the "local" game, and not always in an honest way, as this IndyWeek article points out.

One positive change we should make as part of relocalization is to get the "skimmers" out of local commerce. Why should corporations or other non-local middlemen profit from the production and sale of local goods? For example, why should you buy "local food" from WalMart or some other big-box grocery store when you can buy it direct at your local farmers' market or CSA?


Oil Footprint

An energy footprint—the average energy used per person—can be calculated for a household, a nation, or the planet. In this article, we're primarily concerned about petroleum use, so we will define the "oil footprint" as the oil used per person. On a global scale, the average oil footprint works out to about 4.5 barrels per year per person.


86 million barrels of oil used per day globally x 365 days per year = 31.39 billion barrels used per year globally

... AND THEN ...

31.39 billion barrels per year globally / 7 billion people = 4.5 barrels per person per year

Four-and-a-half barrels per person per year may not sound like a lot, but remember, the majority of the people on the planet use almost no oil and people in wealthier nations use more than average, often much more. In the US, per capita oil consumption is almost six times higher than the global average, with total national consumption at more than 7 billion barrels of oil per year. In striving to emulate US lifestyles, the average oil use figures in the top developing countries (like China and India) are rising rapidly.

Reducing Our Oil Footprint

An oil footprint can be lowered in two ways:

(1) Reduce per capita oil consumption. We've addressed ways to do this in the sections above.

(2) Reduce the number of people using oil. This can happen if some people can no longer afford oil. In the current economic crisis, this is happening in some poor nations. The other way to reduce the number of people using oil, over the long term, is to reduce population.

Population is a touchy issue, and we don't honestly believe much progress will be made on that side of the equation, but it's important to lay out the rationale for why reducing population is a valid part of a package of long-term solutions to peak oil.

Family Size and Peak Oil

Prior to the 1900s, when half the population was still actively engaged in farming, a large family was seen partly as a way of supplying needed labor. Though that logic no longer applies, many religious and cultural circles still actively encourage extra-large families.

Today, the issue of how many children a couple has is thought by most to be completely a matter of personal preference. It's rarely suggested that a couple is "adding to the problem" by having a third or fourth or fifth child. Indeed, up to now, oil production levels have kept pace with the growing energy demands of a growing global population. However, if the world's oil supply is soon to become limited, the average amount of oil per person will necessarily go down.

Poorer societies will suffer first, not being able to afford the increased fuel costs that will be part of a constrained-energy world. But wealthy societies, whose economies are highly dependent on abundant energy supplies, will find that less oil availability and significantly higher energy prices ultimately lead to economic collapse and societal chaos. It's been estimated that somewhere in the 80-90 dollars-per-barrel range, the price of oil starts to send the US economy off the rails. (Is it a coincidence that the high of $147/barrel in 2008 coincided with the start of the worst economic downturn since the Great Depression?)

It is to the advantage of everyone to start looking at the energy problem from all aspects, and if we are to do that honestly, we must talk about overpopulation and the amount of energy used per person. Bearing and raising children is essential to the survival of the human race. Few are willing to say it today, but limiting the number of new children is also essential to the survival of the human race.

Now, let's be clear. Our modest proposal to limit total population does not mean we advocate any extreme measures of population reduction. There are safe, sane, fair methods of reducing population levels over the next half-century. For instance...

  • Increase the availability of family planning, especially in poorer nations.
  • Improve women's rights (which in most countries has a direct correlation with the number of children per family).
  • In wealthier nations, encourage small family sizes and enact immigration policies that help stabilize total population levels. (Remember, average energy use in wealthy nations, even among the indigent of those nations, is much higher than in poor nations, so population stabilization in wealthy nations is even more important from an energy perspective.)
  • Eliminate the tax deduction for child dependents, or at least limit the deduction to two children (which is roughly the "replacement level" of repopulation). People would still be able to have as many children as they want, but society would no longer subsidize large families.
  • Make contraception easily available, especially for teens.
  • Work with religious groups to rethink policies that promote big families. Just as churches have started to help turn the tide on climate change and endangered species, they have an important role to play in talking about family size vs. energy use.


Beyond Pandering Politicians and the Pain-Free Society

Technology and more drilling are not going to save us from the energy-shortage troubles of the future. Only by changing the way our societies function will we make it through the coming challenges.

There are a lot of things we as individuals can do to move the planet toward sustainable, realistic energy solutions. But actions at the individual level can only go so far. We need leadership. Do we have leaders who are willing to try bold plans for reducing oil dependence; for instance, the Oil Depletion Protocol?

Unfortunately, so far, our leaders can't even lead well on the easy part of the solutions. For instance, why are we still subsidizing the oil industry? Those billions should be going into smart energy technologies and energy efficiency. On the need for behavioral change as a partial solution to our energy problem, politicians are utterly silent.

Most politicians hate to talk to the public about energy conservation. Who wants to tell someone they have to live with less? Of course, we've seen that energy conservation can be economically smart too—it's not just about turning the thermostat down. Politicians will need to get over the "Jimmy Carter thing" (where they think a politician cannot safely tell the public they need to use less energy). Carter was decades ahead of his time when he proclaimed the energy crisis to be the moral equivalent of war. Compare that to Dick Cheney two decades later, who declared America's profligate energy habits to be non-negotiable and then engaged in oil wars to prove it.

The smart politicians of tomorrow will reject the last-man-standing approach to energy supplies and instead resurrect, reformulate, and adopt the grown-up, wear-a-sweater approach to solving our energy problems. They will take one-time presidential candidate Paul Tsongas' advice to not be "pander bears"—to not pander to the voters, but instead to tell them what they need to hear to put us on the path to a prosperous, happy future.

The public too, will have to adopt a new attitude. We will have to ditch the bread-and-circuses mentality—that cheap food, cheap energy, and unlimited entertainment options are all it takes to keep us sated and obedient. We will have to demand that our politicians act in accordance with the public's long-term interests—not in our short-term interests, not in the interests of their own reelection, and certainly not in the interests of oil companies and the rest of the military-industrial complex.

In the end, will we continue to fight wars for oil and pursue unworkable energy solutions offered by poltroonish politicians? Or will we insist on moving to real solutions that reduce energy demand, develop clean alternative sources of energy, and avoid the peak-oil cliff? It's our choice.

Know someone who might like this article about Peak Oil and Energy Demand? Please forward it to them.

Publish date: 01-FEB-2010


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  1. Peak Oil and Environment

  2. Peak Oil Solutions

  3. Peak Oil and Energy Demand

  4. The Resilient Household
(Peak Oil Survival/Preparedness)

This is Part 3 of a four-part series. You can  sign up  for the free GP email service so you don't miss any of our other great articles.

Peak Oil and Energy Demand


Biomass and Sustainability
— Why Biofuels Can't Replace Oil


Is Your City or County Prepared for Future
Fuel Shortages and Power Outages?


Energy Peak and Relocalization



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The Crisis of Energy and Money in a Post Peak Oil World

We have been lied to about the stock market, AIG, Citigroup, hedge funds, mortgages, Ponzi-schemes, 401(k)s, the invasion of Iraq... even steroids in baseball. Why accept as truth everything we have been told about energy? Most energy information comes from the same corporate entities that have misled us about everything else...  
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  book cover for Crude World, by Peter Maass, 9/22/2009

The Violent Twilight of Oil

Every unhappy oil-producing nation is unhappy in its own way, but all are touched by the "resource curse"—the power of oil to exacerbate existing problems and create new ones, in spite of (and usually because of) the wealth created by exporting black gold. Peter Maass digs into the troubled world that oil has created, examining the countries, personalities, and issues, from rebels and royalty to middlemen and environmentalists.

  book cover for Localist Movements in a Global Economy, by David J. Hess, 5/29/2009

Sustainability, Justice, and Urban Development in the United States

David Hess offers an overview of localism in the United States and assesses its potential to address the problems of economic stability, political sovereignty, social justice, and environmental sustainability. His perspective is not that of an uncritical localist advocate; he draws on new empirical research to assess the extent to which localist policies can succeed. The book includes an examination of four specific forms of localism: "buy local" campaigns; urban agriculture; local ownership of electricity and transportation; and alternative and community media.


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