Global petroleum consumption surges, defying energy transition efforts

Government efforts to cut emissions failing amid growing demand for petroleum

A data gift arrived in our inboxes the other day. The U.S. Energy Information Administration (EIA) just released an update on all things energy-related. The report includes an interesting table with current estimates and forecasts for global petroleum consumption.

Why is this information thought-provoking? Because with all the talk of energy transitions, governments pouring vast sums of taxpayer money into an ever-growing array of programs to reduce greenhouse gases (GHGs), a proliferation of new energy regulations, and the desperate promises of politicians about painless, steep cuts in GHGs, one would expect that the demand for petroleum and other liquid fuels (PLFs) should be in freefall.

In fact, the opposite is true. As the EIA report shows, worldwide consumption of PLFs is rising steadily and is expected to continue on an upward path – likely for another decade at least.

In 2023, global consumption of PLFs was seven percent higher than in 2015, when the Paris climate agreement was inked. Last year, PLF consumption was virtually the same as in 2019 (right before the pandemic). Looking to 2025, the EIA sees continuing increases in worldwide demand for petroleum and other liquid fuels.

None of this should be surprising. The “dense” energy provided by fossil fuels is the oxygen of economies and occupies a central place in the history of economic and human development. Indeed, “combustion, that is, rapid oxidation of carbon and hydrogen in biomass and fossil fuels, has been the dominant energy conversion since the early stages of human evolution,” according to Canadian energy scholar Vaclav Smil.

But a scenario of higher and still increasing consumption of PLFs is likely to confuse people who have been digesting the statements and promises of politicians in a hurry to reduce GHGs.

The forecast for Canada is no different than that for the world. Consumption of PLFs is increasing here, albeit more slowly than the global numbers. For example, in 2020, there was a marked dip in fossil fuel consumption amid the economic shutdowns resulting from the pandemic. Then, as the worst of the pandemic receded, Canada recorded a significant jump in consumption of PLFs – up by 11 percent – on par with the increase seen at the global level.

Why so, one might ask? Outsized population growth, for one thing, with the knock-on impact this has on the demand for housing and personal transportation. Statistics Canada shows a 10 percent increase in the number of people in our country since 2017 – an astounding fact on its own. Canadians rely on personal vehicles to get to work, take the kids to school, grocery shopping, recreation, vacations, etc. We also ship goods across and throughout our 9.985 million square kilometre country – the second biggest in the world – mostly using heavy-duty trucks and rail. A majority of existing and new personal and commercial vehicles in Canada rely on gasoline and diesel.

The reality is that all personal and goods transportation systems are almost entirely dependent on PLFs. In 2022, Canada’s stock of internal combustion-based cars and trucks represented 97 percent of all registered road motor vehicles. Of these, multipurpose cars, and trucks weighing less than 4.5 tonnes (a proxy weight for personal vehicles), show large increases in numbers – almost double the pace of population growth.

So, if one looks at the data, it shouldn’t be a shock to discover that the demand for PLFs continues to rise and probably will for some time, even as governments implement policies intended to accelerate the shift to hybrid and electric vehicles.

The story is not much different in our own province of British Columbia. In 2017, 98 percent of all registered vehicles weighing less than 4.5 tonnes used gasoline and diesel for locomotion. In 2022, the share was down only slightly to 95 percent. Yes, there has been some movement towards electric, hybrid, and plug-in hybrid cars, but not in an order of magnitude way or sufficient to cause a significant drop in the demand for PLFs.

The lesson from the EIA report and the latest Canadian data on energy use is clear: while the energy system is moving, incrementally, away from fossil fuels, the process will take far longer than many assume. Fossil fuels have been the core of economic, industrial, and human activity for generations.

That isn’t going to change because of the proclamations and sometimes ill-considered policy interventions engineered by politicians or the frantic lobbying of environmental activists.

Jock Finlayson is Chief Economist with the Independent Contractors and Businesses Association and Denise Mullen is Director of Environment, Sustainability and Indigenous Relations with the Business Council of British Columbia.