But the other reason that shale oil can’t be the culprit is that U.S. oil production didn’t start to move higher until 2009. By then, the EIA was already reporting that U.S. gasoline’s energy content had fallen to 121,167 BTU/gal.
Here’s the real culprit:
The 2005 energy bill gave us the Renewable Fuel Standard (RFS), which mandated that an increasing amount of ethanol had to be blended into the fuel supply. As the mandate ramped up, so did ethanol production. In turn, the energy content of gasoline declined.
As was the case with butane blending, adding ethanol is fundamentally changing the recipe of gasoline. The energy content of ethanol is 76,000 Btu/gal, so as ethanol blending ramped up, the energy content in a gallon of gasoline fell.
But we also know ethanol is the reason because the EIA table actually includes the footnote: “Beginning in 1993, also includes fuel ethanol blended into motor gasoline.”
To be clear, it’s not a huge decline in energy content. It’s about 4% across the national gasoline pool (~140 billion gallons per year), and it is masked somewhat by the rising fuel economy standards of automobiles.
Falling energy content in gasoline has a couple of implications. One is that most vehicles will now require more gasoline to travel the same distance. In other words, fuel efficiency will have declined along with gasoline’s energy content.
But the other is that today’s daily consumption of 9.3 million barrels per day of gasoline is equivalent in energy terms to the consumption of 8.9 million barrels per day 20 years ago. Or, another way to think of that is that if we were consuming the same number of gallons of gasoline as we were 20 years ago, our energy consumption would have declined.
I will note one more item in conclusion. It is clear, given the consistency of the EIA data, that they are just calculating an energy content. If they were actually taking measurements, we would see more variability.
Further, I looked at the monthly values over the past year, and the EIA numbers for the energy content of gasoline are the same in summer and winter. This isn’t correct, which means they are simply using calculated numbers that average the energy content out over the entire year.
Footnote: After I published this article at Forbes, a couple of people wrote to suggest that ethanol is either required as an octane enhancer or oxygenate. Oxygenates are only sometimes needed, and there are other ways of boosting octane. But in some cases ethanol might be the cheapest option. We wouldn’t be putting 10% in the gasoline supply though. It would only be used at times in the higher octane grades, and at less than 10%.