3 Reasons Why America Is Using Less Oil

The United States is the largest consumer of oil in the world by a wide margin. In 2012, we used around 18.5 million barrels of oil per day (that's nearly 800 million gallons !). That represents around 20% of global oil consumption, and is still nearly twice as much oil as China uses. Until the mid-2000s, U.S. oil consumption was rising steadily.

However, a sharp uptick in oil prices caused demand growth to stagnate after 2004. The Great Recession then led to a steep drop in demand as people found ways to make do with less oil. In 2010, oil consumption looked like it might rebound, but since then, it has started to decline again. This is likely the beginning of a long-term trend. Here are three big reasons why U.S. oil consumption will continue shrinking.

Natural gas hits the road
The biggest factor undermining oil consumption in the U.S. is the growing abundance of natural gas. Natural gas production has been growing at a steady clip since 2005, but the growth in proven reserves is even more stunning. U.S. proven reserves of natural gas have doubled since 1999! This suggests that the recent supply glut is no flash in the pan.

The result is a growing gap between the price of oil and the price of natural gas. The promise of cheap natural gas is starting to make natural gas-powered vehicles economically viable. Compressed natural gas recently cost around $1.50 less per gallon equivalent than diesel. Fuel-guzzling heavy trucks look set to be the first to make the switch.

This year, Cummins Westport -- a joint venture of Cummins (NYSE: CMI  ) and Westport Innovations (NASDAQ: WPRT  ) that focuses on building natural-gas powered engines for trucks -- introduced the first 12-liter natural gas engine. This engine is capable of powering heavy trucks weighing up to 40 tons, opening up a new market segment for natural gas engines. Cummins Westport already makes natural gas engines for smaller trucks.

Numerous major companies are embracing natural gas for their truck fleets. Home improvement retailer Lowes (NYSE: LOW  ) plans to switch its entire truck fleet to natural gas by 2017 . Meanwhile, garbage titan Waste Management (NYSE: WM  ) began moving toward natural gas last year, and 80% of the trucks it buys between now and 2017 will run on natural gas .

The opportunity to reduce oil consumption by converting heavy trucks to natural gas is huge. Heavy trucks only make up 1% of the U.S. vehicle fleet, but they get lots of usage and have low gas mileage, so they represent 20% of fuel consumption. Adoption of natural gas engines is still held back by an inadequate fueling infrastructure, but this problem is already receding, and will become an even smaller barrier over time.

Ditching oil heat
Cheap natural gas is also cannibalizing oil in another domain: home heating. Oil heat has been waning in popularity for many years, but the recent surge in oil prices and the simultaneous drop in natural gas prices have been the final nail in the coffin. Oil heat is making its "last stand" in the Northeast, but natural gas suppliers are extending their reach due to a combination of political pressure and economic interest.

In recent years, the cost of heating a home with natural gas has often been less than half the cost of using oil heat. While it costs thousands of dollars to convert from oil to gas, for homeowners who expect to be around for 5-10 years it's almost a no-brainer to switch. Moreover, many gas companies provide long-term financing for customers who switch from oil to gas, allowing them to pay off the conversion cost with the energy bill savings over time.

As a result, it should be no surprise that oil heat is rapidly disappearing. According to the U.S. Energy Information Administration, the number of U.S. households using oil heat has dropped from 8.4 million to 6.9 million just since 2008, and this total is expected to drop by another 3% this year. This trend is likely to continue for the foreseeable future.

More fuel-efficient vehicles
The third trend that is weighing on U.S. oil consumption is obvious to anyone who has looked at a new car recently. Due to tightening fuel economy standards -- as well as a shift in consumer preferences due to persistently high gas prices -- the U.S. vehicle fleet's fuel efficiency is steadily improving.

High gas prices have made fuel efficiency a top priority for most car buyers today

According to the EPA, the average fuel efficiency of new vehicles sold in the U.S. improved by 16%. Fuel economy has improved again this year, by roughly 5%. Moreover, with vehicle sales having rebounded strongly since the Great Recession, older gas-guzzling vehicles are being taken off the road at a faster rate. This improved fuel efficiency will more than offset the typical increase in gasoline usage that we would normally see due to population growth and economic growth.

Foolish bottom line
The U.S. still consumes plenty of oil: more than 18 million barrels per day. However, a number of developments are creating a long-term downtrend in U.S. oil consumption. Cheap natural gas is convincing everyone from trucking companies to homeowners to switch from oil to natural gas as their primary energy source. Meanwhile, high gasoline prices and stricter fuel economy standards are boosting the fuel efficiency of the U.S. vehicle fleet.

There are no signs on the horizon that these trends will reverse anytime soon. Combine this with rapidly rising U.S. oil production, and you have a recipe for better energy security and (hopefully) lower prices at the pump a few years down the road.

What next?
You've just learned a little bit about the rapid changes affecting the U.S. energy landscape. If you're wondering how you can make these changes work for you, check out The Motley Fool's new special report: "3 Stocks for the American Energy Bonanza." It offers a comprehensive look at three energy companies set to soar during this transformation of the energy industry. Don't miss out on this timely opportunity; click here for your free copy!


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  • Report this Comment On November 10, 2013, at 1:13 PM, antonioq wrote:

    Maybe it is just one reason: The recession

  • Report this Comment On November 10, 2013, at 1:51 PM, TMFGemHunter wrote:

    @antoniog: The economy may not be growing quickly right now, but it is growing. Historically, that would have meant that we'd be using more oil. But that hasn't happened.

    Adam

  • Report this Comment On November 10, 2013, at 2:26 PM, luckyagain wrote:

    Good analysis. Declining oil consumption lessens the world wide price of oil and will help all oil consuming nations. Expect push back from oil companies by non-economic means.

  • Report this Comment On November 10, 2013, at 2:53 PM, speculawyer wrote:

    "The biggest factor undermining oil consumption in the U.S. is the growing abundance of natural gas."

    What a silly statement. The existence of natural gas does not reduce oil consumption. It is not like people say . . . "Hey, I hear the country has lots of natural gas so I'm going to stop driving my car."

    No, you have to show that the natural gas has displaced oil consumption . . . and for the the most part, it has not. Sure, some niche applications have switching to NG but not many. No, oil consumption is down because the economy is weak, the population is aging, and gasoline is more expensive now that it was in earlier decades. The main causes of the lower oil consumption are the weaker economy and more efficient cars. NG as a replacement is only a tiny tiny factor. It may grow but right now it barely affects oil.

  • Report this Comment On November 10, 2013, at 4:15 PM, TMFGemHunter wrote:

    @speculawyer: Did you actually read the article? There has been substantial switching from oil heat to gas heat in the last 5 years alone. Moreover, a number of businesses are already adopting CNG-fueled trucks because natural gas is so cheap. Natural gas will become even more prominent as a fuel over time.

    Furthermore, while the economy is "weak", it's still growing, which would normally mean more oil consumption (as occurred in 2010). More efficient vehicles are also a major cause of our declining oil consumption, but I covered that aspect in the article. Bottom line: without oil to natural gas substitution, I think U.S. oil consumption would be flat or even growing slowly, rather than declining.

    Adam

  • Report this Comment On November 10, 2013, at 4:31 PM, nomadd22 wrote:

    Like speculawyer says, anybody who says natural gas is the main factor in oil consumption decline isn't very bright. The main victim of increased gas use is coal by a huge margin. Natural gas powered vehicles are a tiny factor lost in the noise. About the only oil burned for electricity is waste oil and asphalt that's not good for much else. And gas can't replace heating oil without infrastructure buildout, which NIMBYs routinely prevent.

  • Report this Comment On November 10, 2013, at 4:41 PM, 123dlsmith38 wrote:

    I agree with this article for the most part, but they didn't mention the fact that gasoline in the US is a blend 90-10 with Ethanol. It's probably closer to only 5% on average being ethanol, but 5% reduction helps with these numbers.

    So, better fuel efficiency, blends with ethanol, natural gas playing a bigger part including some fleets being natural gas now such as for the city or schools. Probably the main three reasons.

    I am not an Obama lover, so when I make this ONE comment about something good he has done don't flame this. Bush got rid of Cafe standards while he was president and oil consumption rose quite sharply until prices started to be a factor. It was bad for the US. Obama reinstated Cafe standards, and that along with demanding that US companies improve fuel efficiency after bailing 2 of the big three out, was big in my mind towards taking the US in the right direction for consumption.

    Where I currently live, I haven't seen gas prices this low since about 2006 or 2007. Considering the quantitative easing that seems to never end, that's a pretty big deal.

  • Report this Comment On November 10, 2013, at 4:59 PM, 123dlsmith38 wrote:

    @speculawyer, I guess you research oil in your business?

    Did you read the article? In the DFW area alone there are various vehicle fleets that have been converted to natural gas.

    Heating oil, which is maybe bigger than you think when you get out to the colder parts of the country that is also rural, is also being replaced.

    So did you not read the article?

    And economy? Texas has had a pretty stable economy, with some loss due to what happened in 2008, but it's getting back on track. Gas prices are so low in this area right now that people are consuming, no problem. If gas prices stay this way through the holidays I would bet that this is going to be a pretty sales quarter for retailers. It's already big where my wife works.

  • Report this Comment On November 10, 2013, at 5:11 PM, chuckbob57 wrote:

    60,000,000+ cars and trucks on the rd since 2008. Thousands of CNG garbage trucks with each using CNG vs 5000 gallons of diesel per yr.

  • Report this Comment On November 10, 2013, at 5:52 PM, ceh4702 wrote:

    Gas prices might be lower but they are not low. It still takes a substantial amount of money to fill a gas tank up with gasoline. This is why people are doing things like buying smaller cars and cars that use less gas and hybrids. There was also that car buyback program that took a lot of older cars off the road. A lot of older cars are gas guzzlers. Then if we are making and shipping less goods, i.e. the economy is down, that means big trucks are using less fuel. Trucks are probably burning more fuel then say 10 or 20 cars. Gas prices have always gone up when oil refineries switched over to refining heating oil. We have had warmer weather and milder winters. If we have a bad winter say in the north east you can expect a hike in prices. I say blame it on global warming. What an irony.

  • Report this Comment On November 10, 2013, at 5:59 PM, stockbridge2112 wrote:

    Maybe its no one has any money to travel and buy stuff

  • Report this Comment On November 10, 2013, at 6:04 PM, Margaretrose711 wrote:

    Well this is just my personal experience: salary cuts after the crash, coupled with a desire to have more free time (time not lost to commuting), caused me to move back to an urban environment where I commute 15 miles round trip to my office, jand my gym and shopping and doctor and dentist are in a 6 mile radius. With the move and the purchase of a more fuel efficient vehicle, as well as adding a few layers of clothing to use less heat in the winter, I offset the salary cut in part through reduced fuel consumption. Really it was a win-win, and if I get pushed much harder on gasoline prices I'll buy a Vespa.

  • Report this Comment On November 10, 2013, at 7:38 PM, GaryDMN wrote:

    Oil is abundant, but the liberals are attacking everything from producers to the pump. raising the costs at every turn. Gas should be $2.00 a gallon, but the government wants it to be more expensive. They blame the middle east for prices, but we don't even get any oil from the middle east. Canada is our main source of import oil and liberal groups from the USA are trying to stop development on a local level in Canada and not allowing new pipelines, forcing them to use trucks and trains to transport oil.

  • Report this Comment On November 10, 2013, at 7:44 PM, Jim85035 wrote:

    I can give you 1 main reason. Millions are out of work, no longer qualify for unemployment, and are not counted on the list of unemployed. It compares to the great depression. People can't afford gas!

  • Report this Comment On November 10, 2013, at 7:54 PM, TMFGemHunter wrote:

    @GaryDMN: Oil may be abundant, but it's not free. Even if there were no government regulation, gas would not cost $2 per gallon. To get prices that low, oil would have to be selling for $50/barrel or thereabouts, and most shale oil producers would be losing a lot of money at that price. If producers are losing money, they'll stop drilling and oil production would fall. The end result; gas prices much closer to where they are today.

    I think gas prices could potentially come down by another $0.30-$0.40 over time. Anything more than that will put too many North American oil producers in the red.

    Adam

  • Report this Comment On November 10, 2013, at 8:49 PM, rbrenzelsr wrote:

    Everyone should be optimistic. North America can save the coal in the ground for the time when it again becomes economically competitive. Despite the Liberal purpose to dismantle American economic advantages in the world, the inherent wealth of North America's energy exist and will exist. Renewables do not exist, at least in sufficient quantity in the right place (new grid needed). Internally, the regional advantage of the coal deposits are disapating. The stupid Liberal government of NY is declining to cash in the advantage of natgas deposits. Pity the Erie Canal

    fathers cain't haunt Albany crowd today....

  • Report this Comment On November 10, 2013, at 9:57 PM, vet212 wrote:

    we cant afford to buy the gas and diesel fuel made from it

  • Report this Comment On November 10, 2013, at 10:05 PM, sgtrt2 wrote:

    With 20 million no longer in the work force I would expect consumption to drop. Thanks to QE and other factors, the price of a gallon of gasoline still hovers near $4.00 per gallon. I guess simple supply and demand rules don't apply to commodities controlled by cartels.

  • Report this Comment On November 10, 2013, at 10:48 PM, doawithlife wrote:

    Technology helps.

    *My light bulbs use 7W for the same lumins as what use to take a 60W bulb.

    *My tv uses 320W for 46 inches, my old TV was 680W for only 32 inches.

    *My new computer uses 80W, old computer 760W.

    *My new monitor uses 14W, old monitor 56W.

    *Old car got 11MPG on average, new car gets 32MPG on average.

    That makes a huge difference.

  • Report this Comment On November 10, 2013, at 11:12 PM, True411 wrote:

    American demand for crude oil is not 18 million bbl /day and hasn't been for several years. Right now it's 15 million. Look up "week in petroleum".

    The fourth reason is, in fact, because the economy, especially the energy intensive housing industry, has NOT recovered.

  • Report this Comment On November 10, 2013, at 11:53 PM, jackweho wrote:

    Hopefully this will put all the camel herders back in the desert where they belong. So long/good-bye to all that ostentatious wealth that they displayed during the oil run-up and the embargos they enacted to squeeze us. Without oil they have nothing. Who is going to use their fancy, over-priced accommodations now that their one precious commodity is not in as great demand as it was.

  • Report this Comment On November 11, 2013, at 2:03 AM, ponyil wrote:

    The switching from oil to natrual gas is slower in our China.

  • Report this Comment On November 11, 2013, at 7:27 AM, TMFMTHead wrote:

    Nice analysis and I agree with it. Yet there is one more reason why oil consumption may be dropping. As the population ages people drive less (already mentioned) but it more pronounced today because the younger generation is less inclined to drive. Instead of getting their driver's license immediately at 16, many are putting it off because driving isn't as important to them as it was in previous generations.

  • Report this Comment On November 11, 2013, at 9:15 AM, imDanielle2 wrote:

    Did you actually say we have had milder winters? Where the hell have you bee for the past 3 years... Hawaii? Here in Missouri, dead center of the country, we have had some of the harshest winters lately and they are already predicting another! We had snow on the ground until late May and it was a horrible freezing blizzard! You people need to stop making up things to fit your agenda.. Stop pretending your FUX News!

  • Report this Comment On November 11, 2013, at 9:22 AM, fingers wrote:

    Now if we could only get rid of ethanol in our gasoline. This was another boondoggle on the American public.

  • Report this Comment On November 11, 2013, at 9:28 AM, epellegrin wrote:

    So in 2012 the US consumed 18.5 million barrels of oil a day. This year the US has consumed over 18 million barrels of oil so how is this a reduction Motley Fool?

  • Report this Comment On November 11, 2013, at 9:40 AM, 1bec1 wrote:

    Unless you are driving a Zamboni or a fork lift to work natural gas isn't displacing the oil (or it's price on the free market)....There isn't even an infrastructure to support it so....not to mention a week ago you were writing an article how there is a huge amount of Nat. gas available...then all of a sudden there is too much to keep drilling for it...well what story is it?

    I feel some are these articles are written to persuade the masses...Why don't you report facts instead of putting opinions in with the facts to write an article.

  • Report this Comment On November 11, 2013, at 10:08 AM, kinko wrote:

    For all of you that bother looking further than your nose here are some facts. Europe is driving cars on propane for decades. It costs about $600 US to convert gasoline car to fuel injected, computer controlled engine. The price of propane is less than half of the gas prices. Propane charging stations are available everywhere, not just in the city. I did some research on doing conversions in the USA. Guess what, propane prices are exactly the same as gas prices. So, it's not what we want or can do. It's what we are allowed to have. Good job oil companies, good job !!!!!!!!!

  • Report this Comment On November 11, 2013, at 10:36 AM, goobie wrote:

    The cheapest I can buy alcohol for is $2.50/quart at Wal Mart for the 91% variety. That's $10/gallon. How can requiring alcohol in gasoline bring the cost down?? Fraking is going to destroy our ground water. When things don't make sense then you know that a politician & big businessman are laughing all the way to the bank.

  • Report this Comment On November 11, 2013, at 11:06 AM, E85Prices wrote:

    The main reason is ethanol..we use 14 billion gallons a year now.

    The US went from 1 billion gallons to 14 billion in the last 7 years

    Also there are over 12 million flex fuel vehicles on the road..compared to less than 50000 cng

  • Report this Comment On November 11, 2013, at 11:09 AM, E85Prices wrote:

    Ethanol trades for around 80 cents less per gallon than gasoline on the Chicago board of trade

  • Report this Comment On November 11, 2013, at 12:01 PM, cityperson wrote:

    With the US economy in a full slow down there will be less consumption of fuels. But the gas prices will remain high to keep the in vestors, that we give money to. Companie will not lose investors at all cost, including your cost of their produced products.

  • Report this Comment On November 11, 2013, at 12:34 PM, mollytherealdeal wrote:

    I disagree with the author, who apparently uses the name TMFGemhunter, but agree with speculawyer. The Department of Transportation is collects data an important statistic, Vehicle Mile Traveled (VMT), which is total traveled by all miles traveled per year. This has dropped in 2007 and flattened out. I have seen a few electric vehicles, but almost no natural gas vehicles. In my part of the country, I do not see any natural gas refilling stations. I have seen fewer cars and more people car pooling and riding bicycles and buses. The price of gasoline is still relatively high in comparison to a decade ago, so that seems like a more important factor than natural gas substitution. Unemployment is still quite high, and unemployed people do not drive that much. Demand destruction seems more probable for lower oil consumption than natural gas substitution.

    Currently, natural gas prices are low. Will we be able to keep those prices low in the future?

  • Report this Comment On November 11, 2013, at 1:42 PM, desuhu wrote:

    And as soon as everyone starts switching vehicles to natural gas, that price will start going up rapidly. The consumer is always the loser in these situations. Consume less fuel, then the states are griping because they're not getting as much in gas taxes, so they start thinking about taxing you on the miles driven. Switch from oil to natural gas, then the powers that be will start thinking of different ways to tax you on that. Use less electricity, then the electric companies ask for increases in rates, due to lower consumption. We can't win.

  • Report this Comment On November 11, 2013, at 3:46 PM, elul25 wrote:

    High unemployment means fewer people driving to work and driving for work....hence less gas usage.

  • Report this Comment On November 11, 2013, at 5:10 PM, kermode73 wrote:

    I wonder how much does renewable energy production has also help decrease the use of oil.

  • Report this Comment On November 11, 2013, at 5:19 PM, clintharman wrote:

    In the words of the immortal James Carville "Its the economy, stupid!" We are stagnant and in an uncertain regulatory environment which makes investment in any kind of alternative fuel source near suicide.That will only be undertaken by businesses who can create their own infrastructure. The vehicles used will have to be able to convert from NG to Gasoline the same way that a few power plants convert from Coal to NG & back based on price.

    Infrastructure for NG vehicles is where Gasoline infrastructure was in 1915. No filling stations.

    No major manufacturer has built NG capable autos.

  • Report this Comment On November 11, 2013, at 5:24 PM, twobeerjohn wrote:

    We lost gas mileage when we went to the 90-10 blend with ethanol. Imagine what the mileage would be on our cars with old fashion straight gasoline. I have heard mention of adding more alcohol to the gas. How hard will it be to get higher mileage with more alcohol in the gas. Alcohol burns faster. We have done a pretty good job since the 80's of improving gas mileage in spite of the ethanol. I don't want to go back to the stone ages, but the crazy demands on the auto manufacturers are driving the prices of cars higher. Costs more to R&D.

  • Report this Comment On November 11, 2013, at 5:52 PM, pkluck wrote:

    desuhu is right, where I live we get electric rate increases every damn year, and every year one of the reasons in the filing with the PUC is decreasing demand. Ethanol is cheaper only because of billions in govt subsidies, ie crony capitalism. Take from one to give to what our govt believes is more deserving, or gives the most political contributions.

  • Report this Comment On November 11, 2013, at 5:59 PM, Applianceman wrote:

    Dang! I thought it was because millions of people out of work and staying home.

  • Report this Comment On November 11, 2013, at 6:03 PM, TMFBlacknGold wrote:

    Good article, although I would say ethanol and biodiesel mandates, while controversial, have done a heck of a lot more to reduce oil consumption than natural gas-powered vehicles. The Renewable Fuel Standard was enacted at the same time consumption began to fall, actually. Last year over 13 billion gallons of ethanol were blended in the nation's gasoline supply, which represented 10% of the volume. There's a slight energy loss, but it's a pretty big deal nonetheless.

    --Maxxwell

  • Report this Comment On November 11, 2013, at 6:30 PM, lunatik96 wrote:

    Many people have mentioned people are simply not able, or unwilling to buy gas for a variety of reasons related to the recession or weak economy. The recession is NOT over. People are still hurting even though financial markets have recovered.

    To GaryDMN, what is your rationale for stating gas should be $2/ gal (sounds like wishful thinking). If anything, the price should be higher considering the subsidies provided to the Oil corps and the agri businesses for ethanol.

    The article states these are 3 main reasons. There are hundreds of factors in these analysis. Assessing the % effect is difficult. At least they are providing an awareness the market is changing.

  • Report this Comment On November 11, 2013, at 6:53 PM, driller101 wrote:

    Poorly researched. CNG is just a tiny fraction. When was the last time you saw a station where you could fill your CNG vehicle?

    Biggest factor is the economy and the gradual replacement of clunkers with newer more efficient automobiles and trucks. Yes the economy is growing and we are almost back where we were, and every day the fleet as a whole is more efficient.

  • Report this Comment On November 11, 2013, at 10:03 PM, DaiEvans1955 wrote:

    I worry about the comprehension of some Fools. In their rush to judgement and spout their particular view of the world, they'd do well to stop and read what the author has said.

    "3 Reasons Why America Is Using Less Oil"

    Nowhere does the author suggest that these are the *only* reasons. By all means, suggest others if you consider them important, however vilifying other opinions does not make yours more valuable - indeed, it suggests the reverse.

    And please, one data-point does not make a trend, so personal observations are only useful if thousands of others provide the same insight without prompting.

    And if you consider it to be poorly researched state specifically why you believe so - rhetorical questions are not a thoughtful intelligent response.

  • Report this Comment On November 11, 2013, at 10:23 PM, LazyOldMan wrote:

    I live in Dallas Texas. There are six CNG stations in Dallas, two more in Ft Worth, one in Garland, and one in Irving. A total of 10 scattered across the metroplex. There is a lot more CNG use than you might think. Many cities have gone to all CNG vehicles. The conversion is cheap and it saves them a ton of money. Most mass transit busses and cars are CNG now... Not only is CNG a cleaner fuel, it costs a lot less to maintain the engines because they last a lot longer running on CNG.

  • Report this Comment On November 12, 2013, at 1:27 AM, EatMorChikn wrote:

    It hasn't been that long ago that I read an article regarding miles driven in the U.S.! ( I think it was on Business Insiders) They are comparable to miles driven in the early to mid 1990"s. So, while I agree that commercial fleets are moving towards NG - like AT&T, UPS etc. the lower consumption of oil/gas/diesel is probably most relative to the economy! The refineries must operate at maximum efficiency (probably 90+) to make money! So, the price of gasoline is directly impacted by the consumption rate and not always by the amount of oil supply! (I can remember when gas went from 36 cents to 72 cents in one day in the seventies mostly as the result of ending the Vietnam War! The consumption decrease of the Military had that kind of impact on consumption/prices!)

    Btw: I was always told that each barrel of oil refined produces 60% gasoline, 20 % diesel/jet fuel/kerosine etc. another 20% is residual which makes up the other oil related products! Those percentages can be adjusted - but the gasoline has to be moved - exported or burned!

    Gasoline/Diesel are still the safest form of energy regarding transportation, and retail consumption!

    One aside: The exploration and drilling for new oil/gas reserves/supplies will also be significantly impacted with cheaper prices. Some say today if oil dops below $70/barrel or lower the domestic market for oil will be hurt!

  • Report this Comment On November 12, 2013, at 6:29 AM, gkirkmf wrote:

    Excellent Point:

    "Btw: I was always told that each barrel of oil refined produces 60% gasoline, 20 % diesel/jet fuel/kerosine etc. another 20% is residual which makes up the other oil related products! Those percentages can be adjusted - but the gasoline has to be moved - exported or burned!"

    This is why diesel is still $3.85 per gallon when gasoline is now selling for less than $3.00 some places. Unless someone comes up with an inexpensive kit to convert my Cummins Diesel to CNG it will be another 10 years before I convert. Meanwhile,by that time, at the rate that fracked natural gas wells deplete, CNG will be $4.00 per gallon and the government will require it to be used so the investors in the natural gas bubble will be made whole!!!!!

  • Report this Comment On November 12, 2013, at 8:52 AM, dsmoyer1 wrote:

    Hey Goobie, have you ever visited a wellsite where fracking has occurred or is occurring? You know nothing about the process of drilling and completing a oil and gas well and you know nothing about groundwater except for the propaganda you watched in that poorly written, deceptive "documentary", Gasland. Visit a wellsite or take a moment to read about the processes and procedures of drilling and completion before you inject your nonsense.

  • Report this Comment On November 12, 2013, at 9:08 AM, EatMorChikn wrote:

    I would really like to see the author of this article write one on the percentage of tax federal and state (maybe even a chart to include each state) included in the price of each gallon of Deisel/Gasoline etc.

    If I recall Kansas raised their state tax something like 9 cents per gallon a few years ago which always makes them higher than Missouri and Oklahoma. (You can' blame it all on the Oil companies or ethanol.) Ethanol as an additive is used for an oxygenate to provide a more complete burn of gasoline. There are propane add on devices that also help diesel engines make them burn cleaner and increase performance - all those things cost money.

    NG is not the game changer for oil - more like a short term trend.(But, commercial vehicles that are limited in range/service area are probably a good place for NG.)

  • Report this Comment On November 12, 2013, at 9:38 AM, swiver wrote:

    So why does Westport's stock continue to drop?

  • Report this Comment On November 12, 2013, at 10:02 AM, TMFGemHunter wrote:

    I thought I had posted a comment above, but it never seems to have made it into the discussion stream.

    One of the reasons why I focused on natural gas is that it's less visible in our day-to-day lives. To be clear, essentially nobody has a natural gas powered car today. Natural gas is making its biggest impact for fleets that do a lot of local driving. For example, city buses, delivery trucks, garbage trucks, etc.

    Unless you're looking carefully, there's no reason why you would notice whether one of these vehicles is actually running on CNG instead of diesel. Commercial fleets like these also don't rely on a public fueling infrastructure: they tend to refuel at their bases.

    With the new Cummins-Westport engines coming out, there's a growing move into CNG for long-distance trucking. That will require a buildup of fueling infrastructure, but I don't see that as a major impediment. (Just look at how quickly Tesla -- which is still little more than a startup -- is building out its charging infrastructure.)

    One other point: the figures I used in this article actually exaggerate the extent that we use crude oil, because I'm using the EIA's data on "petroleum products". The EIA actually includes ethanol used for fuel in those statistics.

    I didn't try to adjust the figures in order to exclude ethanol because the data I have on renewables only goes back a few years. However, it's worth pointing out that according to EIA statistics, renewable substitutes for oil (like ethanol) have NOT been growing for at least the past two years. There was a big jump in ethanol between 2000 and 2010, but it's flatlined since then. In other words, renewables are not the reason why U.S. oil consumption has been declining for the past 2-3 years.

    Adam

  • Report this Comment On November 12, 2013, at 11:15 AM, pilotwood51 wrote:

    Excellent article. The author defines why we are using less oil, while not bringing up the price per gallon. That could be another article all on its own.

    I believe Time had an article that stated the price of oil is set by the global market, that we are actually exporters of oil now. Thus, our drop in consumption does not necessarily mean a parallel drop in price per gallon.

  • Report this Comment On November 13, 2013, at 2:00 AM, PeakOilBill wrote:

    LNG powered railroad locomotives are coming in a few years. It is about half the price of diesel fuel. Because natural gas burns so clean, piston engines running on it last longer, with less frequent oil changes needed. They emit far less pollution than diesel engines too.

  • Report this Comment On November 15, 2013, at 8:09 PM, cmalek wrote:

    @pilotwood51:

    Crude oil prices may be set by the global market. However, there is a disconnect between oil prices and gasoline prices.

    Riddle me this - if gasoline price is realted to crude oil prices then:

    How can the price of gasoline in one gas station be different by 20 or more cents from the price across the street?

    In the last 4-6 weeks the price of gasoline in New Jersey fell about 50+ cents. In the same time the price of gas in New york fell only 20 cents, if that much. Why?

  • Report this Comment On November 16, 2013, at 9:48 AM, Spider8r wrote:

    @Adam "Natural gas is making its biggest impact for fleets that do a lot of local driving. For example, city buses, delivery trucks, garbage trucks, etc."

    It would have been nice to include a figure on how much diesel CNG trucks are displacing; I could not find it with a quick Google Search; but as it is a moving target I did find that for a 60 CNG truck or bus fleet converted would save about 500,000 gallons of diesel.

    Great point on ethanol, I have read that 10% ethanol reduces fuel efficiency (or increases the fuel consumption) by 3.3% (biased) to 24% (very humid areas). The best comment I read was: Do your math homework Ethanol is Stupid Juice.

  • Report this Comment On November 16, 2013, at 9:59 AM, KraigA wrote:

    There seems to be some misconceptions in this article and the comments associated with it.

    First, CNG may be practical for large fleet vehicles, but for the average driver, not so much.

    It takes 3.72 GGE, (gasoline gallon equivalent) of CNG to equal one gallon of gasoline. This means that if you get 30 MPG on gasoline, it will take 3.72 GGE of CNG to go the same distance. So, to have any usable driving range, you will need to have a CNG tank that takes up most of the trunk in an average car.

    Second, converting a vehicle to CNG will cost a minimum of $1500 for the kit and the tank, plus labor. So cheap is a relative term.

    Third, there are no documented cases of pollution of groundwater associated with fracking, despite what Hollywood tries to tell you.

    Fourth, supply and demand will set the price of oil. We are producing more oil in this country now than anytime since the early 90's, so supply is up. And it's true that increased fuel efficiency is a large factor in the drop in demand, but the reduction in miles driven due to the lowest workforce participation rate since the 80's is at least as large a factor.

  • Report this Comment On November 16, 2013, at 11:25 AM, HurricaneJohnson wrote:

    Good article. I had suspected that cheap NG would eventually replace old oil-burning devices with the result of less upward price pressure on gasoline, As old industrial buildings become retrofitted - to include the heating system using gas burners - we'll continue to see the steady trend downward.

    But gasoline is still king in cars....and will be for a long time. What else fits in a gallon jug and can take you and 3300 pounds of metal about 30 miles?

  • Report this Comment On November 19, 2013, at 11:44 AM, bkellyfool wrote:

    The number of companies that have been switching to natural gas from diesel for their truck fleets is impressive - Walmart, Fedex, Lowes, Coke, etc. The list goes on and on. The saves for them is what is driving it. As far as the CAFE standards are concerned, President Bush did not eliminate them he just did not increase the CAFE Standards during his administration. In fact, there was no increase or decrease to CAFE Standards from at least 1992 to 2009. So there were no improvements during President Clintons' term.

  • Report this Comment On November 19, 2013, at 11:46 AM, bkellyfool wrote:

    Also, even though the CAFE Standards did not increase from 1992 to 2009, fuel economy for cars continued to improve.

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