StrataGist 2010

One Analyst's Observations…

Diminishing Returns: Rethinking The "Living Large" Mentality (June 2010)

When hearing news about the Gulf of Mexico and other oil spills, did you ever consider how much demand you're responsible for? While British Petroleum, lax federal regulation, and the U.S. president are convenient targets, Americans themselves are responsible for the economics of supply and demand.

In late May 2010, the Telegraph published a commentary that succinctly points to "America's insatiable appetite for oil" as the underlying cause (an estimated 21.0 million barrels a day).[1] Comparisons are made with the banking crisis, which can also be attributed to Americans' "living large" mentality. Another journalist suggests that higher gas taxes would encourage conservation and support public transit. Development and implementation of alternative energy solutions could supplement such practical immediate actions in the future.[2]

Oil Consumption

Extensive media coverage provides activist organizations such as the National Audubon Society, National Wildlife Federation, and the Sierra Club with a platform to encourage Americans to downsize their lifestyles. There is some historical precedent. The Santa Barbara oil spill contributed to creation of Earth Day in 1970, which increased public awareness. The Exxon Valdez disaster in 1989, however, did not lead to major changes in U.S. energy policies.

In 2007, U.S. daily oil consumption (approximately 20.7 million barrels per day) was three times that of China (7.6 million) and four times that of Japan (5.0 million). Countries rounding out the Top Ten were Russia, India, Germany, Brazil, Canada, and Saudi Arabia.[3] According to estimates derived from U.S. Energy Department and Census Bureau data from 2008, average oil consumption per capita was lowest for New York (7 barrels per person per year), while Wyoming was highest (15 barrels per person per year).[4]

Carbon Footprints

Online sources suggest that a significant portion of China's greenhouse gas emissions are traceable to products that are exported to Europe (e.g., Britain, France, and Sweden), but Europe doesn't officially count imported products in their carbon footprint tally. The United States continues to be China's largest trading partner in carbon. Up to one-third of the carbon footprint of the average U.S. household is associated with imported goods. A consumption-based system to evaluate the impact would increase European and U.S. tallies and decrease China's significantly.[5]

While transportation continues to account for the majority of U.S. oil consumption, a report published by the International Panel for Sustainable Resource Management suggests that substantial benefits could be derived from reduced reliance on fossil fuels in the energy and food segments. Greater adoption of vegetable-based diets in developed countries is one solution. Among developed economies, between 20.0% and 30.0% of a country's emissions impact is due to imports.[6]

Ambivalence, Anger, Or Action?

Much of the Gulf of Mexico oil spill coverage highlights the anger and frustration voiced by coastal residents and government officials. Implementing major changes in energy usage and policies takes time, but measurable progress can be made. From 1999 through 2007, average per-person gasoline consumption in the three Northwest states (Idaho, Oregon, and Washington) posted annual declines.[7]  According to numbers compiled and presented by one nature conservation organization, offshore wells in the Gulf of Mexico produce 1.75 million barrels of oil daily. Americans' gasoline use accounts for nearly 10.0 million barrels of oil per day. An average of 428 gallons of "vehicle gasoline" is used per person per year in the United States compared with 59 gallons per person per year among Europeans. Since commuting to work accounts for between 20.0% and 30.0% of the average American's car miles, there's room for reducing car use in other areas.[8]

Reducing gasoline consumption doesn't have a direct impact on current oil drilling practices, but it could have a cumulative effect over time. What would reducing your driving by 40 miles a week require? Here are some general examples:

• Eliminate one shopping trip per week (e.g., one to two gallons savings for 15 to 30 miles fewer miles driven in a gas guzzler)
• Factor commuting, entertainment, socializing, and other driving needs into the selection process for your next home location
• Share a ride to at least one social gathering each week (e.g., one to two gallons savings)
• Shop on the way home from work (e.g., one to two gallons savings)
• Use public transit one day a week (e.g., two to three gallons savings for 40 to 60 fewer miles driven in a moderately efficient vehicle)

Reducing electrical energy use is another option. Californians consume 40.0% less per capita than residents of the rest of the United States.[9] Getting there hasn't been easy, however. As suggested by a lengthy discourse on Wikipedia, long-term efforts can pay off. In California, energy-efficiency measures targeting appliance standards and building codes were in the mid-1970's. Consumption remained flat in subsequent years, while national levels doubled. Despite such forward thinking, a combination of supply issues (e.g., dverse impact of drought on Oregon's hydroelectric-generated power, deregulation, exorbitant pricing / market manipulation, etc.) and high demand (extreme summer temperatures, rolling blackouts, etc.) in 2000 led to an energy crisis. Approval of a "flexible cap" system eventually stabilized pricing. Declaration of a state of emergency enabled California to purchase electricity for the utilities from mid-January 2001 through mid-November 2003. Coupled with a more efficient application process, 38 power plants were added to the system. The big picture suggests that financial incentives and/or pressure can drive change.[10]

For past issues of StrataGist, visit the 2008-2009 and 2010 Archives.

[1] "Don't Blame BP - Gulf of Mexico Oil Spill is America's Fault," Telegraph, May 28, 2010.
[2] "Who's to Blame for the Gulf of Mexico Oil Spill?" Transit Miami, June 4, 2010.
[3] www.nationmaster.com
[4] "How Much Gas Does Your State Use?" Infrastructurist, April 26, 2010.
[5] "Europe Has Much Bigger Carbon Footprint - When Trade Is Factored In," Green Fudge, March 11, 2010.
[6] "Fossil Fuel Use And Feeding World Cause Greatest Environmental Impacts," UNEP, June 2, 2010.
[7] "Breaking News: Gas Consumption Goes Into Reverse," Sightline, April 2008.
[8] "Gulf Spill Update: The Numbers Don't Lie," Cool Green Science, May 26, 2010.
Bill Finch, the director of conservation for The Nature Conservancy in Alabama,
[9] "Breaking News," Joseph LaStella, May 28, 2010.
[10] http://en.wikipedia.org/wiki/Efficient_energy_use  - and - …/California_electricity_crisis