(Published October 7, 2015)

It is widely known that crude oil has many applications – in industrial, energy, and chemical products, in agriculture, for shipping and for personal and business travels, to name a few. Some sectors, however, demonstrate unquenchable thirst for petroleum. Transportation is the most notable example. The growth of crude oil demand for transport needs has been spectacular in the past 40 years. From 1973 to 2012, the sector increased its oil consumption from 1022 to 2326 million tons of oil equivalent (mtoe) on an annual basis, i.e. it more than doubled its demand.

The following charts illustrate visually the significance of transportation to crude oil markets. Data reflect consumption patterns as reported by the International Energy Agency’s Key World Energy Statistics 2014.

In these graphs, transport includes aviation, navigation, road and railroad traffic, and pipeline transport, as per IEA definitions. Industry covers everything from processing of metals and minerals to production of chemicals and machinery to production of paper, food and textile. Finally, the ‘Non-energy’ category refers to oil which is used in various sectors as a raw input for production rather than as fuel (e.g. manufacturing of plastic goods).



Oil demand in the transport sector experienced annual average growth of 33.4 mtoe between 1973 and 2012. Naturally, this is related to the increased use of transport vehicles such as passenger cars and airplanes. Conversely, oil consumption in industry dropped from 448 mtoe to 310 mtoe during the same period, i.e. by 3.5 mtoe on an annual basis.

Therefore, it is easy to explain how cyclical consumer behavior works its way to crude oil markets. For example, seasonal patterns in the northern hemisphere (where the majority of population lives) affect fuel demand and oil prices. Gasoline demand is usually higher during the summer driving season, while wintertime demand for diesel increases because it is often used for heating.



In industry, and in power generation in particular, oil was partly replaced by coal. IEA data show that in 2012 the share of industry in the world’s total coal consumption was around 80 percent, up from 56.6 percent in 1973. In absolute numbers, global industry consumed 727 mtoe of coal in 2012, i.e. approximately double the 1973 level. Data from BP, the oil major, confirm that the rise of coal, natural gas and nuclear in power generation is one of the reasons behind the relative decline of oil for industrial use.

Why do we care about these shifts in consumption? The importance of transport as the largest consumer of crude oil demonstrates how globalized, mobile, and connected modern society has become. For decades, the United States, the world’s largest car market and also the largest gasoline consumer (around 40% of global gasoline demand), has enjoyed a growing fleet of passenger and commercial vehicles reflecting the so called American car culture.

From 1975 to 2012 (roughly the same period as the one covered by the IEA data on oil demand), the number of road vehicles increased from 137.9 million to 253.6 million, according to information from the US Bureau of Federal Statistics. These figures account for passenger cars, light duty vehicles, trucks, motorcycles and buses. In other words, it’s not surprising that the global oil demand shifted towards transport use. Having such facts in mind can help us appreciate the importance of data on crude oil and retail fuel markets; information on fuel prices around the world has become a necessity.

More articles on oil and transport fuels:
What is driving crude oil prices
Countries with highest supply and demand for gasoline