Average per-capita oil consumption around the world has remained near the 4.6 barrels-per-year mark since 1982, and the IEA sees it holding steady through 2030. (image: theoildrum.com)

By 2030, every new car in Japan will have to get 85 mpg in order to survive, says Morgan Downey in a guest blog posted Thursday on the Oil Drum. Downey reached this conclusion by deconstructing the International Energy Agency’s (IEA) 2009 World Energy Outlook (WEO). The IEA serves as energy advisor to the 30 countries that make up the Organization for Economic Co-Operation and Development (OECD). Here’s his thinking: According to the WEO, the IEA believes global oil supply in 2030 will be approximately 105 million barrels per day (bpd) Although that number is significantly lower than previous WEO predictions, it will still necessitate the discovery and development of at least four Saudi Arabian-sized oil producing regions before 2030. This, says Downey, is the IEA’s basic “reference scenario.”

The IEA, whose oil supply predictions have come under attack recently, estimates that per capita oil consumption will remain the same as it has for the past 27 years: 4.6 barrels per year. And the forecast for 2030? 4.6 barrels per year per capita. Downey says that, considering a growing world population, huge gains in oil and energy efficiency will have to be made between now and 2030 to maintain the 4.6 number, since it is based on the bold assumption that four Saudi Arabias will be discovered and developed over the next 20 years.

The IEA estimates how the 4.6 barrels per year will break down by geographic region on the demand side of the oil equation. They estimate that if China, India, and other non-OECD countries continue to grow as expected, then other countries will have to reduce oil consumption through forced or voluntary efficiency. Japan, for example, will have to improve its efficiency by 40 percent, says the IEA. Hence, the 85 mpg Japanese cars. Even small motorcycles in Japan don’t come close to that kind of efficiency.

But how do we hope to attain that efficiency? Downey’s thesis is that although climate change legislation, economic weakness, and availability of a specialized alternative such as natural gas and electric vehicles will help, the way we will achieve extreme efficiency is through high oil prices, such as $100 a barrel by 2020 and $115 by 2030, which are the prices forecast by the WEO report. These prices would be mean that all energy consumers would have to cut back on their usage, thereby increasing overall efficiency.

“Reacting to oil prices is by definition too late,” Downey writes. “That is why a Vehicle Efficiency Market is the least painful way for individual countries to gain advantage. We have to create an economic incentive to become more efficient independent and ahead of oil prices.”

This viewpoint contradicts a report by Deutsche Bank that recently predicted that oil prices will stay low in the short to medium term because of increased efficiency in the U.S. and other OCED nations. Although both articles agree that efficiency in the U.S. and the other OCED must increase dramatically, they come to that conclusion through different thought processes. Downey believes that we will increase efficiency, but only after steep increases in oil prices force such increases. Deutsche Bank posits that because of the economic slowdown, oil prices will begin to drop in 2010 and remain below current levels for much of next year. Their analysts are also much more optimistic about the advances in energy efficiency the U.S. and other OCED countries can achieve.

The bottom line is that the best plan for improving efficiency is to start now and keep aggressively pursuing new efficiency gains in vehicles, power plants, and home energy use. The more electricity, gasoline, and heating oil we save now, the more money we can save ourselves in the future.