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Why Would Oil Demand Peak, Contrary to Peak Oil Supply?

Salman Ghouri & Daniyal Habib
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Thursday, August 17, 2017
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Why Would Oil Demand Peak, Contrary to Peak Oil Supply?
People find it hard to believe that there is another side of the 'Peak Oil Supply' theory, which is 'Peak Oil Demand'.

We have used the forecast highlighted in the paper “Wake up call for oil companies: electric vehicles will deflate oil demand” and used EIA reference case (IEO-2016) and the IEA 2015 current policies global oil demand forecast highlighted in “Should oil companies reconsider long-term upstream investment?” Both the agencies have predicted that global oil demand in 2040 is expected to reach about 121 MMbd, suggesting peak oil demand may not occur until at least 2040. Two possible scenarios are highlighted in the following graph.

In the reference case, due to penetration on EV, hybrid, fuel cells and autonomous vehicles expected to displace 13.8 MMbd, oil demand will peak in 2035. In the high case, auto-industry is expected to displace about 39 MMbd in 2040, and peak is expected to take place in 2025.

Peak oil demand is, therefore, quite possible to occur before 2030. Oil companies who are still betting on oil demand to grow beyond 2050 need to reassess their investment strategy.

Dr. Salman Ghouri is an oil and gas industry advisor with expertise in long-term forecasting, macroeconomic analysis and market assessments.

Daniyal Habib, J.D, Indian University Robert H. Mckinney School of Law.


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WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Robert  |  August 22, 2017
The peak oil discussions that were more scientific and less sensational were about the end of cheap easy oil, not about running out of oil. It has long been recognised there is abundant sources of hydrocarbons that can be converted to conventional liquid fuels it has just been a mater of costs. The world went through the first peek in 2006-08, before this oil was $10-$30 barrel then prices rose and all sorts of new extraction started , oil sands and shale. Post peak oil is around $50 plus or supply is shut in on new supplies. As the cost of oil increases alternate sources of power become competitive and oil will loose market share. As new technologies are developed they will become cheaper, i.e. shale drilling and fracking is cheaper now just like solar and wind is becoming cheaper. It is simple economics. However if the total cost of energy increases then world growth and standard of living improvements will slow so we should be working to get the lowest cost mix of energy generation and storage.
Shane  |  August 21, 2017
The bigger threat to the oil industry in the next 1o - 15 years will be the improvements in the internal combustion engine. Reduction in fuel consumption due to technology have been considerable. This will have a bigger impact in the short term than EVs.
Charles Daly  |  August 18, 2017
Never underestimate the speed of technological change. If a battery capacity breakthrough occurs then the change to solar and wind energy will accelerate exponentially. Peak oil demand could then be just around the corner. I am glad that my career is coming to a close after 51 years riding the demand curve.
anton  |  August 18, 2017
Oil is needed to manufacture EVs. Also, they cant be used in many roads worldwide.
CW Minshew  |  August 17, 2017
Peak oil demand is a concept that assumes that there will be few entrants in the world economy that will demand more oil products. Indeed, IF governments insist on funding the alternatives to crude products; wind, solar, plug ins, then perhaps we are at peak. However, the alternatives ALL must be subsidized-they are not economic alternatives without exterior financing. ALL alternatives cost more than the fossil competitor; it is the ridiculous government policy to promote these higher costs; at the expense of the fossils. Long term, restrict government spending, cheaper fossil fuels increase.

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