How Efficient Are We in Our Use of Oil?

The oil spill in the Gulf of Mexico and the continuing environmental catastrophe that has resulted got me thinking about domestic oil consumption in the United States.  Clearly, this disaster is one consequence of our dependence on petroleum and the need to satisfy that dependence with offshore exploration in increasingly difficult and hostile environments.  It is also generally known that the United States consumes more petroleum than any other country in the world.  The most common explanation given for this fact is that the United States is the richest country in the world and thus, to sustain this level of economic production, the Unites States consumes more oil than any other country in the world.  So, to test that proposition, I decided to pull some numbers together and do a quick analysis comparing economic performance and oil consumption among various countries.  I’ve attached several graph in .pdf format for reference.

Clearly, in the aggregate, the US economy is the largest in the world.  Figure 1, a link to which is provided below, details the top twenty countries in terms of year 2009, total gross domestic product (“GDP”), derived from purchasing power parity (“PPP”) calculations to adjust for relative price levels between countries.

So, the United States, by far, has the largest economy.  But Figure 1 raises the question as to whether aggregate GDP is the best representation of how relatively rich a country is compared to others.  To adjust for population differences, a more accurate measurement of how rich a country is compared to other countries is to compare GDP per capita.  Figure 2, a link to which is provided below,  details the top twenty countries in terms of year 2009 GDP per capita, again adjusted with PPP calculations.  This graph shows a slightly different picture and shows that the United States is really not the richest country in the world.  In fact the United States is not even in the top five richest countries in the world.

So, now that we know that the United States is not the richest country in the world (at least on a per capita basis), the question becomes what is the relationship between the relative wealth of a country and that country’s petroleum consumption.  Figure 3, a link to which is provided below, details the 2008 aggregate petroleum consumption of top twenty richest countries on a per capita basis.  This data is from the U.S. Energy Information Administration (“EIA”).  This data shows that, far and away, the United States is the top consumer of the petroleum.  But again, these numbers are in the aggregate and do not reflect differences in population.

So, to account for differences in population, Figure 4 details the per capita petroleum consumption of each of the twenty richest countries in the world (on a per capita basis).  Again, these numbers are based on data from the EIA.  Population numbers are based on data from the United Nations Department of Economic and Social Affairs.

Figure 4 shows some interesting results which may be surprising to some (they were to me at least).  First, the United States is not the top consumer of petroleum on a per capita basis.  Several countries consume more oil per capita each year than the United States.  Some of these countries are rather surprising, at least to me (Belgium?).  Also, Figure 4 shows is that there is not a one-to-one relationship between the relative “richness” of a country and the petroleum consumption as suggested by the original proposition that is often used as an explanation for the fact that the United States, in the aggregate, consumes more petroleum than any other country.  Figure 5 further shows the relationship between the GDP (PPP) per capita and petroleum consumption (in barrels per year per capita) for each of the top twenty richest countries.

Now that we generally know the relationship between GDP (PPP) per capita and petroleum consumption for the twenty richest countries, the question now becomes which of these countries is the most efficient in its consumption of petroleum.  Figure 6 details the GDP (PPP) per barrel of petroleum consumed for each of the top twenty richest countries.  Again, here we see that the United States is not the most inefficient of the twenty richest countries (perhaps, surprisingly, countries like Belgium, Canada and the Netherlands are less efficient).  But before you start up the ole “USA! USA! USA!” chant, note that the United States is in the bottom half in terms of efficient use of petroleum.

Some may criticize this comparison of the United States against the top twenty richest countries in the world.  Many of these countries are smaller countries in terms of population and geography.  So, as an alternative, we can compare the efficiency of each of the G-20 members.  Figure 7 details the GDP (PPP) per barrel of petroleum consumed for each of the G-20 members.  This comparison shows that, when compared to other G-20 member, the United States seems pretty inefficient in terms of its petroleum usage, ranked fifteenth out of twenty.

So, what conclusions can we draw from this data?  First, the United States is not the most inefficient country in terms of petroleum use.  There are a handful of rich/developed countries that are less efficient.  That being said, we are also not that efficient in our use of oil; we are not even in the top half of rich/developed countries.  We clearly have a great deal of room to improve.  The United Kingdom, for example, is roughly 70% more efficient.  Germany is roughly 50% more efficient.  If we approached these levels of efficiency, that means we could continue to grow our economy but use less oil to do it.  And, given our population and the fact that we consume so much petroleum, even a small improvement in efficiency could make a huge difference.