Globalization Directions: just add a Box and Oil

At this time of year it may be wise to dwell briefly on how consumer products are transported.  Globalization runs on container shipping and oil.  Beginning in the 1950s, standardized 20 and 40 foot intermodal containers revolutionized shipping and enabled vastly cheaper, quicker, longer, more complex supply chains.  For an interesting history of containerization see 'The Box'.

World Oil Demand in Motion

When data is put in motion over time it becomes more interesting.  I have added World data to the Oil Demand Motion Chart. You can look at this chart any time from the link on the right side of this web site.  The oil data comes from the BP annual statistical review.  The population data is from the UN and the GDP data is from the World Bank.

Some interesting observations one can take from the chart are: 1. the evolution of oil demand in developing nations (click on Korea); 2. how developed nations oil consumption per capita is relatively stable (click on the US or UK); 3. that world oil demand has stuck at around 4.6 barrels per person for over 26 years despite huge population and economic changes over that time (discussed here previously).

I will be adding a lot more data to this chart over the coming weeks, especially some future oil demand scenarios.

The inspiration for the oil demand motion chart came from Fig. 1-13 on page 18 of Oil 101.

What is it about 4.6 barrels per year?

Cats are curious
(a friend of mine behind the computer screen)

Since 1982 the number of people in the world has grown by almost 45% or 2 billion people (chart 1).

Oil supply has been unable to outpace population growth since the 1970s and has from 1982 until recently just been able to keep pace with demand (chart 2). What can one person do with 4.6 barrels (193 US gallons) per year? With a vehicle getting 30 miles per gallon one can drive an average of around 16 miles per day.

Why has per capita consumption been so stable since 1982 having grown at an increasing pace for the prior 120 years (chart 2 again)? The answer is that a new method of rationing demand emerged in 1983: benchmark pricing linked to transparent free liquid markets (see chapter 1 of Oil 101). Free markets and necessarily volatile oil price became the adjusting factor matching available supply to demand.

To put the global average of 4.6 barrels of oil consumption per year in perspective, the number of barrels consumed per person in 2008 in India was 0.9, China 2.2, Brazil 4.6, Germany 11.1 and the US 23.3.

Build your own chart of consumption patterns over time by clicking here (click the 'Play' button to start and the individual country to track over time - set X axis to 'Time' and Y axis to 'Oil Barrels Consumed per Person').

Happy 150th Birthday Oil!

Exactly one hundred and fifty years ago today, the oil well which started the modern oil industry began producing.

I have been kindly allowed a guest post on The Oil Drum which is the most widely followed energy blog in the world (thanks Gail).

Big Whale

Historical touchstones can humble us by marking how far we have come in such a short period of time. What now seems obvious was quite recently not so.

The following table from the New York Times of January 8, 1862 shows the number of North Pacific whaling ships and barrels of whale oil taken. You can see the pattern of more scarce whales.

(source: The New York Times, Jan 8, 1862. Click excerpt for full article)

In the same article there is a table describing the relatively steady climb of whale oil prices until the birth of the modern petroleum industry in 1859. Increasing whale oil prices were the primary drivers in the search for a new alternative lower cost lamp oil.

As you will know from Oil 101, petroleum had been used almost exclusively as a lamp oil from 1859 until the early 1900s. The following letter to the New York Times of February 8, 1891 shows that although widely used for lighting, the use of petroleum for transportation had been considered early in the history of the modern oil industry. The US government "pronounced it a failure". In the 16 years following the letter below there were mass produced automobiles and the first powered aircraft.

(source: The New York Times, Feb 8, 1891. Click excerpt for full article)