A Peak Oil Stress Map For the US  

Posted by Big Gav in , ,

Stuart at Early Warning has a post on a study of the impact of rising fuel prices on different geographical regions in the US (which looks similar to a comparable study done in Australia a few years ago - The Impact Of Rising Oil Prices On Sydney Suburbs) - Peak Oil Stress Map.

The map [below] is a first rough cut at where the stress of peak oil (or any oil shock) is likely to be greatest. It comes from taking county level data from the Census Quick Facts and extracting two variables: the average travel time to work (from the 2000 census), and the median household income (from 2008 data). The idea is that if average travel time is long, that probably indicates that people in that county need a lot of oil to run their cars. On the other hand, if income is low, they are probably going to have more trouble paying for that oil. So I divided the travel time by median income, and then rescaled that index by its own average and standard deviation to produce a map of where the problems are likely to be greatest.

This is a fairly rough methodology. In particular:

* It's average, county-level, data, so this may miss a lot of neighborhood level details
* It ignores other calls on people's income (like housing costs)
* It assumes that work travel time is a decent indicator of overall household oil need (in particular, it misses north-eastern dependence on heating oil).

Still, the broad geographical results are fairly interesting, I think. It seems likely to be a robust result that the south-east of the country is the worst affected region, and since this is the main geographical base of the modern Republican party, that probably has interesting political implications. Drill, baby, drill.

2 comments

"Barry, dear, does this oil spill make me look ugly?"

Anonymous   says 8:06 AM

Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
- China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
- Transition takes 30 years
- No peak in global production

In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
- Oil demand elasticity of -0.3
- Current production 84 million BOPD, current price US$ 80
- Peak production 100 million BOPD
- Post peak decline rate of 3-4%

If you want to try the model for yourself using your own assumptions it can be found at Petrocapita Income Trust:
www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86

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