Last year SACOG participated in two conferences on global energy and climate change: one sponsored by the University of California, Los Angeles Extension, and another by the Southern California Association of Governments. SACOG has prepared an issue brief looking at whether there is anything about the probable future cost and availability of transportation fuel that should be considered as the next Metropolitan Transportation Plan for 2035 (MTP 2035) is developed.
Worldwide demand for oil is growing steadily, driven significantly by the rising economies in China and India, and now consumes virtually all available supply at peak use periods. Current world oil usage is about 84 million barrels per day, growing about 3 million barrels per year. Estimates vary, but a common baseline projection calls for demand to rise by about 45 percent by 2030.
Two-thirds of U.S. oil consumption comes from the transportation sector, where there are the fewest available alternatives to petroleum. Over the last 20 years, Californian's consumption of gasoline and diesel fuel increased by 50 percent. Gasoline consumption is projected to increase another 18 percent by 2025, absent significant policy or market changes.
Over 60 percent of the oil used in the U.S. is imported, and many experts now believe that the world oil supply is not keeping up with increasing consumption and production. Even if there is additional oil production capacity today, there are significant limits to increasing oil refining capacity in the United States. California's refineries are running at 98 percent of capacity, and a new refinery has not been built in this country since 1976.
Oil wells and fields reach a point of peak production capability typically about 40 years after going on line. Experts generally agree that worldwide production will reach its peak sometime between 2010 and 2040.
Forecasters are split on the future of oil prices, just as they are on the question of when the worldwide oil peak will occur. World oil prices have more than tripled in the last three years, but over the last 20 years prices have been low. Accounting for the substantial increase in average fuel efficiency of vehicles, it costs 30 to 40 percent less per mile to drive today than it did 25 years ago. However, vehicle miles traveled per person increased by 60 percent during this period.
If the supply-demand situation gets to the point where demand significantly outstrips supply, consumers will have no choice but to change their travel behaviors. Options range from taking fewer auto trips, carpooling, buying more fuel efficient vehicles, to using transit, walking, bicycling, or using some other mode of transportation. People also could change the locations of their houses, jobs, or both to reduce their travel miles.
The more challenging question to answer is how travel behavior will change if gasoline price continues to rise. As prices rise, lower-income users will be forced to change behavior, on average, sooner than others. Higher fuel costs also impact the costs of operating buses, putting further pressure on the challenge of making transit competitive with auto travel.
Several alternatives to reducing gasoline consumption exist, including higher fuel-efficiency standards; mixing ethanol with gasoline or diesel, bio-diesel, gas-toliquid fuels; increased use of electric vehicles, hybrids, liquefied petroleum gas, and hydrogen. California estimates that if major programs began implementing the alternatives the state could virtually stop the rise in total annual consumption of gasoline and diesel fuel over the next 25 years. Conservation is the only real and effective strategy to address the peak oil situation that is available in the relatively near future.
In many ways, SACOG has embarked on a path to ease the impacts of higher energy prices or gasoline supply limits, should either impact our region in the future.
The Blueprint land use strategy addresses these issues directly: through more compact and mixed-use development patterns that reduce the length and number of car trips, and make walking, bicycling, and transit use more viable.
The current MTP invests significantly in transportation modes that don't rely on oil; the possibility of higher prices or supply limits may lead to an even greater emphasis on these modes in the next MTP.
The current MTP did not explicitly address the issue of reliability of transportation fuel supplies and assumed that the real cost of gasoline would remain flat through the 25-year planning period. Both of these assumptions deserve to be revisited. SACOG intends to analyze how significant increases or decreases in oil and gasoline costs might affect citizens' travel choices and the future performance of the region's transportation system.
SACOG has produced 14 issue briefs to educate the public about important issues being studied as the Metropolitan Transportation Plan is developed. Several more briefs will be added this year. Visit www.sacog.org/mtp2035 or call (916) 321-9000 to request copies of the briefs.
Regional Report for February - March 2007 (text-only version)
Also available: PDF version
Sacramento Area Council of Governments