Sunday, January 6, 2013

Post Peak Oil Economic and Population Scenarios: Part 2 the Developed Region Importers

This continues my survey of economic and population scenarios, based upon my PIE analysis of consumption and import/export trends analysis presented in my previous series. 
Part 1 presented the scenarios for the four net petroleum exporter regions; this time, I cover the first three of five net petroleum importer regions; the developed regions of North America, Europe and Japan.
Economic and Population Trends for the Net Petroleum the Importing Regions
North America (NA)
Figure 9 shows the population change trend for NA.

NA’s population growth trend has been on a long slow decline: it was about +1.5 %/y in 1965, is about +1%/y today, and is projected to be about +0.5 %/y in 2065.  That means that population growth is expected to stay positive well into the next century.  That, in turn, means that to just stay at the same level of per capita petroleum consumption, the petroleum consumption rate would have to increase by about +1 to +0.5 percent per year for at least the next +50 years or so.  Of course, that is not what has been happening and it is not what I expect to happen in the future.
The right hand side axis in Figure 10 shows the actual population (blue circles) and predicted population (dark blue line) based on the population growth trend shown in Figure 9.
The solid blue line illustrates the continued population increase from present levels in NA from 461 million in 2011, to 684 million, at the end of my study period in 2065.  Population is not projected to peak until the next century when the growth rate finally hits zero (roughly mid-century, 2150, with a population of 850 million). 
The left hand side axis in Figure 10 shows the calculated per capita petroleum consumption rate (red circles), and, my predicted per capita consumption rate for NA going forward (solid red curve).
NA’s per capita consumption peaked in 1978, at 25 b/py, before a sharp drop thereafter.  From 1983 to 2007 per capita consumption was in a bumpy plateau of about 20 to 21 b/py, before breaking downwards in 2008 to 18 b/py by 2011.  My downwards projection going forwards is based on my predictions that domestic petroleum production will remain flat-to-declining, imports will stay on its downward trend and exports will stay on its upwards trend.  These production, import and export trends all point to lower domestic petroleum consumption rates for NA.  The prediction that the population will continue growing, only serves to steepen the predicted decline rate in per capita consumption.  In fact, I think that the decline rate in per capita consumption predicted in Figure 9 may be an optimistic one, because it assumes a continuation of the export rate trends from two major sources: AF and FS.
As I discussed in Part 6 of my previous series, NA’s declining imports from ME, SA and EU have been partly made up for by increasing imports from AF and FS.  However, as we saw in Part 1 of the present series, both AF and FS will be in serious trouble if they continue their present export trend, and, probably sometime soon, these regions will have to cut back their exports just to provide enough petroleum to sustain their own populations.  This of course, doesn’t bode well for NA with its increasing dependence on imports from AF and FS.  If AF and or FS cut their exports, then the solid red prediction curve in Figure 9 would have a steeper decline.  But for now, let’s just go with this prediction curve as is. 
From 2005 to 2011, NA’s per capita consumption rate dropped from 21 to 18.3 b/py: a 13 % drop in 6 years, or -2.2 %/y.  The prediction curve projects for a steeper drop in per capita consumption from 17.7 to 12.7 b/py from 2011 to 2020—a 28% drop in 9 years or -3.1 %/y.  From 2020 to 2040, the  per capita consumption rate is predicted to continue declining, from 12.7 to 6.9 b/py.  That’s another 46 % drop over 20 years, or, -2.3 %/p.  By 2065, the per capita consumption rate is down to 4.2 b/py—another 40 % drop in 25 years or -1.6 %/y.    
In summary, NA’s per capita consumption rate is predicted to drop from its recent local high of 21 b/py in 2005 to 4.2 b/py in 2065—an 80% drop over 60 years.  That’s an overall annual decline rate of -1.3 % /y for 60 years—but, as I illustrated above, there are some periods, such as from 2011 to 2020, that are much steeper than this.  The prospects for real economic growth from NA therefore look very dim.  Rather, a long, sustained forty year downwards economic spiral (h/t to Bill Hick’s former blog) is what I am expecting to be in store for North America. 
Beyond 2030, the predicted per capita consumption rate decline curve is pretty well governed by NA’s domestic production rate, net export rate and the predicted continued population growth.  As I discussed in Part 6 of my previous series, based on the current export and import trends, I projected NA to become a net exporter of petroleum in about 2029.  I suppose that NA could cut its exports in an effort to mitigate the predicted decline of per capita consumption.  On the other hand, some of the regions that NA will export to, like EU and JP, will really need those imports to avoid starvation and population decline, as import rates from the traditional suppliers like, ME. FS and AF, go into terminal decline. 
An 80% decline is a very large relative decline, comparable to the relative decline in per capita consumption that the ME was predicted to have, and, much steeper than the relatively mild decline that was predicted for SA, in Part 1. 
Still, in absolute terms, even at 4.2 b/py in 2065, NA would be much better off than what ME (1.9 b/py) or SA (2.5 b/py) are projected to be at in 2065.   Indeed, 4.2 b/py is only slightly below where SA and FS are at today (4.7 and 5.3 b/py, respectively in 2011).  And, a 4.2 b/py per capita consumption rate is nowhere close to my predicted threshold rate, of 1 b/py, for starvation and population decline, which is more than I can say for the other two developed regions.    
Europe (EU)
Figure 11 shows the population change trend for EU.
Like NA, EU’ population growth trend has been on a long slow decline: it was about +0.8 %/y in 1965, is about +0.1%/y today, and is projected to be about -0.6 %/y in 2065.  Population growth is projected to hit zero in about 2022 and to decline thereafter.   A declining population after 2022 would help mitigate a declining per capita petroleum consumption rate, but, I don’t think that this population decline rate will be large enough in magnitude to have much effect on what is to come.
The right hand side axis in Figure 12 shows the actual population (blue circles) and predicted population (dark blue line) based on the population growth trend shown in Figure 11.
The solid line blue line illustrates EU’s population topping in 2022, at about 603 million, and slowing declining thereafter.
The left hand side axis in Figure 12 shows the calculated per capita petroleum consumption rate (red circles), and, my predicted per capita consumption rate for EU going forward (solid red curve).
Again, similar to NA, EU’s per capita petroleum consumption rate peaked in 1979 at 11 b/py before a sharp drop and since 1984 slowly climbed back to a recent high of 0.1 b/py in 2006 before breaking downwards to 9 b/py in 2011.    My prediction of continuation of this downwards trend is based on EU longstanding steeply declining domestic production rate trend, the shift of declining imports from ME and soon AF toward Asia, and the expected decline in imports from its main supplier FS (see Part 7 of my previous series).  And, of course, the growing population, at least until 2022, doesn’t help EU’s per capita consumption rate.  EU’s predicted declining exports, mainly to NA, helps somewhat, but overall the trend is for a sharply declining per capita consumption rate.
How sharp a decline?  Well, the 10% decline from 10 to 9 b/py, from 2006 to 2011, corresponds to -2 %/y.  From 2011 to 2020, the predicted per capita consumption rate (solid red line) to go from 8.8 to 4.8 b/py—45% decline in 9 years or -5 %/y.  Ouch!  From 2020 to 2040, as exports from ME, AF and FS all disappear, the per capita consumption rate is predicted to further decline from 4.8 to 1.3 b/py—another 73% decline in 20 years, or -3.6 %/y.  Dang, that hurts!  The relative decline in the per capita consumption from 1.3 to 1.1 b/py from 2040 to 2065 is not as dramatic, at -0.6 %/y.   
Of course, based on these projections you can imagine that I think EU’s prospects for real economic growth are even dimmer than for NA.
The relative decline from 10 to 1.1 b/py, from 2006 to 2065, is an 89% drop, which is even worse than the 80% relative decline for NA.  But, EU’s per capita consumption rate is a little more than half  that of NA’s in 2006, and consequently, that 89% drop puts EU’s absolute per capita consumption rate just slightly above my predicted threshold rate, of 1  b/py, for starvation and population decline.  In fact, past 2040, what keeps EU slightly above that threshold rate is the predicted increasing imports from NA, and to a lesser extent, from SA, plus EU’s accelerating declining population change trend.
Dropping from a per capita consumption rate of 11-10 b/py to 1.3-1.1 b/py I think, would put the EU’s economy at high risk of transitioning from a developed region economy to a third world economy, at least by today’s standards, and, right on the threshold of starvation and a sharp population decline. 
The predicted per capita consumption rate of 1.3 b/py is about the same as AF’s per capita consumption rate today.  The projected per capita consumption rate of 1.1 b/py from 2050 to 2065 would put EU well below that predicted for the ME or SA in 2065.
However, EU would still be better of than AF and FS, which are predicted to drop below the 1 b/py threshold for starvation and population decline.  But, if these regions cut their exports for domestic use, to mitigate starvation and population decline, then EU will be negatively effected even sooner than the projected in Figure 12.  In other words the solid red line in Figure 12 would decline even more steeply than presented.  I will return to these considerations after I finish my nine-region survey.
Japan (JP)
Figure 13 shows the population change trend for JP.

Like NA and EU, JP’s population growth trend has been in decline for a long time: the peak growth rate since 1965 was +1.4 %/y in 1974.  Since then, the growth rate dropped to zero in about 2005, and has trended increasingly negative since then.  In 2011, the population change rate was -0.26 %/yr and thus is projected to be about -1.2 %/y in 2065.  The declining population trend would help mitigate a declining per capita petroleum consumption rate, but, this is still not large enough in magnitude to prevent a substantial decline from happening.
The right hand side axis in Figure 14 shows the actual population (blue circles) and predicted population (dark blue line) based on the population growth trend shown in Figure 13.
The solid line blue line illustrates that JP’s population peaked at about 128 million in 2005, and has been declining thereafter.
The left hand side axis in Figure 14 shows the calculated per capita petroleum consumption rate (red circles), and, my predicted per capita consumption rate for JP going forward (solid red curve).
Similar NA and EU, JP’s all time per capita petroleum consumption rate peak was in the 1970s, specifically, 1973, at 17.7 b/py.  More recently, in 1996, it reached another lesser peak of 16.8 b/py, but, the per capita petroleum consumption rate has been declining since then.  As I showed in Part 8 of my previous series, JP has almost no domestic petroleum production of its own, other than “refining gains” from the country's domestic petroleum refining sector.   As such, JP is heavily dependent from imports from other region, mainly the ME, and to far lesser extents the remaining Asia Pacific region (rAP) and FS. But exports from ME and rAP to JP are in steep decline and given the present trends, projected to hit 0 before 2040 and 2027, respectively. 
The declining imports from ME and rAP over the past several years accounts for most of the recent decline in JP’s per capita petroleum consumption rate.  The decline from the peak of 16.8 b/py in 1996 to rates of 12.7 b/py in 2011, corresponds to a 24.4% decline over 15 years, or -1.6 %/yr.  More recently, the decline from 2005 levels of 15.2 b/py, to the 2011 levels corresponds to -2.7 %/y.  My predicted per capita petroleum consumption rate decline (solid red line in Figure 14) from 11.8 to 6.7 b/py from 2011 to 2020 in a 43% drop over 9 years, or, -4.8 %/y, which is almost as steep as the decline predicted for EU over this same period. Once again, Ouch! 
At least EU still has some domestic production from 2020 to 2040.  But, JP has no domestic production to speak of.  Consequently, from 2020 to 2040, the predicted per capita petroleum consumption rate decline in JP from 6.7 to 0.21 b/p corresponds to a 97 % drop over 20 years, or -4.8 %/y.  This is even worse than -3.6 %/y predicted for EU over this same period.
Notice that JP’s per capita petroleum consumption hits a minimum of 0.207 b/py in 2041 and then starts to slowly increase again thereafter.  The five times increase from 2041 to about 1  b/py in 2065 reflects predicted increasing exports to JP from NA.      
Of course, predicted per capita petroleum consumption rate declines of -4.8 %/y for the next 30 year should tell you what I think of the prospects for economic growth in JP—even dimmer than the dim prospects for EU. 
I think that JP will be facing greater troubles than a declining economy, however.  By 2034, JP’s per capita consumption drops below 1 b/py, my threshold for starvation and population decline.  Consequently, I predict that JP’s population would rapidly decline from its predicted number of 111 million in 2033 to its pre-petroleum era level of 43.8 million (JP’s estimated population in 1900 see Part 1) by 2037.    I wonder, how attractive will that oil in the East China Sea look to JP around 2033, to avoid a potential 67 million population decline over four years?
Well, assuming that war with China doesn’t break out in 2034, by about 2048, as exports from NA increase, I predict the population, as supported by keeping the per capita consumption rate at 1 b/py, could come back to at least to the census bureau’s projected level of about 80 million by 2064. 


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This post appears without any images, courtesy of the folks at Google, who either deliberately, or, through stupidity, have altered blogger in a manner disables a user’s ability to upload images (http://productforums.google.com/forum/#!topic/blogger/4YJorLUSxw0).  If when Google figures out what they are doing, or, makes an announcement of a policy change, then I will update the post accordingly.  This is probably part of Google’s ongoing campaign to get people to switch from IE to their Chrome browser.  
Next time, maybe, I will be back to finish my nine region survey of the Asian Region Importers, China and the remaining Asia-Pacific region. 

Jan 7, 2013:  figures added; not due to any fix on Google's part, but me jumping through the extra hoops of creating a "Picasa Web Album" at Google and then cross-load the images to this post. 

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