Petroleum Liquids in Energy Supply and Demand-Some Significant Influences
Authors: Owings M.J. 
Published: December 2007

It is one thing to extrapolate trends to feed history into a computer and come up with a forecast. It is quite another to second-guess governments, anticipate social unrest, divine another East Texas field. But it is the degree to which we can do the latter that determines the validity of the former. And on such depends the course of a nation.

Introduction

The subject of petroleum liquids supply and demand cannot be treated satisfactorily apart from energy in total. In discussing petroleum liquids the term is used interchangeably with oil and in all instances except one is intended to include crude oil and derivatives, associated liquids, and liquids from gas streams. (Fig. 10 comparing U. S. and European petroleum consumption is the exception. Petroleum in that instance includes oil and natural gas.) Petroleum liquids find use in a variety of compositions, but taken together they constitute but one part of the total energy picture. They are a significant part, however, as Fig. 1 depicting Free World energy consumption shows. Not only are they significant now, but their importance will continue to grow throughout the period covered by the illustrative forecasts used here. This figure shows that from 1950 to 1970 oil as a primary energy source grew from 32 to 52 percent of the total, and then more slowly its proportion grows to 57 percent of total primary energy by 1985.

Energy needs, or the energy frame into which petroleum liquids fit, is a function of economic petroleum liquids fit, is a function of economic growth. Fig. 2, for example, shows how closely U. S. energy consumption follows Gross National

Product (GNP is in constant dollars). The relationship between energy consumption and economic growth is not a constant from country to country, nor is the role of petroleum liquids uniform. The economic, political, and sociological factors influencing demand are as varied as the country-markets considered. Fig. 3 depicts the comparative significance of energy-consuming areas. The U. S., Western Europe, and Japan are shown as the dominant areas of growth in energy consumption and represent contrasts in energy demand and supply problems encompassing those found generally in all problems encompassing those found generally in all areas of the Free World. I will discuss in some detail each of these three areas.

The portion of energy demand represented by petroleum liquids or oil is a composite of varied petroleum liquids or oil is a composite of varied markets, each subject to forces peculiar to it. In forecasting the demand for particular products within these markets we use applicable correlations or other mathematical techniques such as econometric models and get reasonably good results. A significant amount of our time is spent on this aspect of forecasting, both in making forecasts and in developing or improving upon the techniques. Naturally we have forecasting errors in this area. but the source of greatest error is failure to anticipate and accurately interpret large sweeping changes, many of which arise from governmental actions. This latter aspect of forecasting is the subject under discussion here.

United States

Historic trends in changing fuel use to meet U. S. energy needs together with a forecast of energy and fuels demand in the period 1920 to 1990 are shown in Fig. 4.

JPT

P. 521