the market share of alternative vehicles will increase to 49 percent of new vehicle sales by 2035 due to the combination of more stringent corporate average fuel economy standards, the renewable fuel standard and higher fuel prices (See Figure 1). However, with continuing improvements in the fuel economy over time, conventional gasoline-powered vehicles are projected to retain the majority of sales.Figure 1 looks like this:
EIA projects for vehicle fleet changes in future years (EIA)
But the projection carries with it some inherent assumptions about the continued availability of those fuels, both here and in the other countries around the world. And in some of those growth is expected to be such that, by 2035, countries such as China will have more vehicles on the road that the USA. Last year the Chinese car industry overtook that of the United States, and just recently Saudi Arabia began selling more oil to China than it does to the United States. Sales to the US averaged about 2,000 bd below 1 mbd last year, while those to China just crossed that significant marker. Similarly Russia, the country that now leads the world in crude production, increased its sales to China so that it now supplies around 7.8% of total Chinese crude imports. (Through last October this amounted to around 100 million barrels of oil for the year).
There is a new pipeline that is being constructed to help those exports, with the goal of increasing sales from their current 6% of Russian exports to between 20 and 25%.
After many years of discussions, the construction of the pipeline started in April 2006. The ESPO was supposed to connect Tayshet (in the Irkutsk oblast) with the Kozmino port on the Pacific Ocean. The new oil pipeline is intended to stimulate the development of a new oil production centre in Eastern Siberia, which is particularly important in view of the expected decline in production from the Western Siberian fields and in the Urals-Volga region. The ESPO's total length will be 4857 km and it will have an annual capacity of 80 million tons. The first section between Tayshet and Skovorodino (Amur oblast) has a capacity of 30 million tons.Russia’s Energy Strategy through 2030 does not see a shift from fossil fuels to alternative energy until after 2022.
Initially, oil will be transported from Skovorodino to Kozmino by rail. The second phase of the project (to 2014–2015) will see the construction of the pipeline section to the terminal in Kozmino (50 million tons) and the expansion of the first section’s capacity to 80 million tons. Moreover, a branch connecting the ESPO with China's Daqing has been under construction since April 2009; it is expected to start transporting 15 million tons a year in 2011 (with an option of extending the capacity to 30 million tons).
Now these projections of growth, and the fuel supplies required to meet them are predicated on there being enough, relatively economically viable, supplies of crude to meet that demand. There are the occasional troubling signs that this might not be the case.
JoulesBurn has one of his usual, incisive and informative posts on The Oil Drum today discussing his latest analysis of information from the satellite view of the recent Saudi addition at Haradh. This, the third addition to the program of extraction from the Southern tip of the large Ghawar field, is being produced, and bragged about by the Saudi, at a level of 300,000 bd. But as Joules has spotted, and pointed out, there are a lot more production wells that have been drilled into that field in recent years than Saudi Aramco have been admitting to, and their placement suggests that they are being needed to maintain production from wells that might not have been able to sustain the original targets.
Now that could be a problem, and Ace has commented that this could signify that Aramco might not be able to sustain more than 8.35 mbd this year, and expects a decline next year.
Into this picture now increasingly steps the slowly growing global economy. And as it seasonally happens US demand for gasoline is beginning the steady increase that normally occurs between now and mid-summer, with the concomitant increases in price.
US Demand curve from TWIP (March 3, 2010 )
Turning to the vehicle miles travelled data for last November the numbers were positive across the entire country, with an average increase of 1.4% over the previous November. (This is in contrast with the October figures where the overall had shown a drop of 0.7%, the first drop in 5 months). The rolling 12-month total, because of that, reached a plateau, though I expect that it will return to upward progress next month, perhaps beginning to exceed the driving done in 2004.
Rolling 12-month total of vehicle miles driven in the USA through November 2009. (FHWA )