Energy, Commodities How much oil did you consume today?

Many of us associate oil with transportation, heating (used as fuel oil in furnaces for heating homes), and electricity (diesel generators). But oil is more ubiquitous than that. Oil is also used to make plastics, synthetic materials, chemical products, personal hygiene goods, and asphalt. And then there is the assortment of everyday products that contain oil products, such as nylon, polyester, acrylic, spandex cloths, soap, shampoo, detergents, deodorant, toothpaste, contact lenses, lipsticks, shaving cream, aspirin, chewing gum, plastic, sunglasses, and even Lego bricks.

Crude oil is sent to refineries where the molecules are separated into petroleum products. While gasoline, distillate (diesel, heating oil) and jet fuel are well known petroleum products, lesser-known ones are hydrocarbon gas liquids (HGLs), naphtha, and petrochemical feedstocks. Hydrocarbon gas liquids—products such as ethane, propane, pentane plus, isobutane, and propylene—can be extracted when crude oil is refined into petroleum products.

So let’s return to your oil consumption guess. The pandemic and net-zero ambitions might have influenced your estimate and may have made you believe that your consumption is less than it is. Indeed, consumption remains elevated in large industrialized nations. While global oil demand fell below 80 million barrels per day during the pandemic, it now stands at a record high above 103 million barrels per day, supported by the recovery in mobility (e.g., commuting and travel).

But once again, oil is used for more than fueling our cars and planes. Breaking down global oil consumption by sector, road transportation accounts for less than half of total demand (passenger vehicles 27%, road freight 16%). If we then add in airplanes (7%) and ships (4%), transportation accounts for a little more than half of total demand. The rest comes from the petrochemical sectors (14%), followed by buildings (8%), industry (6%), power generation (4%), and other uses (14%).

Per capita, the OECD and the Middle East consume the most oil

In 2023, average oil demand is likely to be close to 102 million barrels per day—it may peak above 103 million barrels per day during the summer months. One barrel of oil contains nearly 159 liters. That means on average, the world has consumed almost 16.2 billion liters every day this year. With the world having more than 8 billion inhabitants, on a global per capita basis, daily consumption is around 2.01 liters. To put these numbers into context, every day we consume the same amount of oil that doctors recommend us to drink water.

There is, however, a huge discrepancy among regions when it comes to oil consumption. The OECD countries and the Middle East consume the most oil per capita, while emerging markets (excluding the Middle East) consume the least.

In the United States and Canada, consumption is close to 10 liters per person each day. Like for Middle Eastern countries, the numbers are influenced by domestic demand from the petrochemical sectors. If petrochemical products are produced domestically but exported to other countries, their numbers might be higher than the effective daily consumption rate. While North America is also a big petrochemical producer, most of the petrochemical products produced there are used domestically and not exported. It is also worth highlighting is that US per capita consumption has been stable at around 10 liters over the last 10 years.

We expect oil demand to keep rising, but at a slower pace

Some market participants think oil demand will peak over the coming years due to growing diversification of the fuels used for passenger vehicles—namely, the rapid rise of electric vehicles. But we are skeptical and expect oil demand to keep rising this decade, but at a slower growth pace than the average 1.2mbpd over the past years. Demand should slow once it has fully recovered from the pandemic, after which it should plateau and begin gradually declining at some stage during the next decade. Emerging markets should continue driving oil demand in the years ahead and offset the expected drop in OECD countries, where demand peaked last decade. Ongoing urbanization in emerging markets is likely to support demand growth, particularly in countries with rapid population growth, aspirations for economic development, and low per capita consumption.

Main contributors: Giovanni Staunovo, Dominic Schnider, Wayne Gordon

See the full report - Energy: How much oil did you consume today? , 27 September, 2023.