Publications: Notes at the Margin

Stagnating Petroleum Demand; The FTC's Strategy to Stimulate US Oil Production (May 13, 2024)

 

Petroleum consumption growth may have come to a halt. Slowing global economic activity accompanied by increased electric vehicle (EV) and hybrid market penetration and replacement of conventional petroleum-based diesel with renewable diesel seems to be cutting US use by as much as three hundred thousand barrels per day and global use by perhaps another four hundred thousand barrels per day. Falling gasoline and diesel prices reflect this trend. Forecasters at the International Energy Agency and other organizations have missed this change so far. At the same time, some oil-exporting countries have indicated their intention to boost output quotas at the June OPEC meeting. Another period of price instability may be pending.

 

Meanwhile, the US Federal Trade Commission might prompt a more rapid increase in US crude production by allowing asset transfers from companies pursuing “output discipline” to firms more interested in “output maximization” and by cracking down on US firms’ alleged collusion with oil-producing nations. One could call it a “neutron bomb” approach, one that will preserve and maybe enhance the assets while neutralizing individuals who passively or actively cooperated with OPEC to maintain high oil prices.

 

 

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