Count them as skeptics
The theory that oil demand soon will peak found few believers at the CERAWeek conference.
The idea that demand for oil will peak in the coming decades and begin an inexorable decline as alternative forms of energy spread has gained widespread credence. But at the CERA Week by IHS Markit global energy conference in Houston last week, the notion that the world is losing its thirst for crude faced widespread skepticism.
Doubters were quick to point out that less than a decade ago, analysts and other prognosticators predicted the imminent arrival of peak oil — the day when the world would begin to run out of oil — and have been thoroughly proven wrong by a flood of crude from shale and other resources. When Haitham Al-Ghais, Kuwait Petroleum Corp.’s director of market research, was asked about peak oil demand, he smiled and responded quizzically, “What demand?”
Helen Currie, chief economist at Conoco Phillips, said during a panel discussion at the conference that her company had modeled electric car demand and other factors and “struggled with finding a peak” “anytime within the next 20 to 30 years.”
“We readily acknowledge it’s plausible, but we really tend to see oil demand being fairly strong and robust,” she said.
The concept of peak oil demand has overtaken the oil world since last summer when Royal Dutch Shell CEO Ben van Beurden predicted demand would peak within a decade. BP joined the chorus last month, although it predicted it would take about 20 years. But both companies expect demand for fossil fuels, including natural gas, will remain strong in the decades ahead; BP expects oil demand to plateau after peaking sometime before 2040.
“The suggestion that rapid growth in electric cars will cause oil demand to collapse just isn’t supported by the basic numbers,” BP chief economist Spencer Dale said.
The theory of peak oil demand is largely driven by concerns that global efforts to curb greenhouse gas emissions will limit the uses of fossil fuels, such as oil, gas and coal.
How oil companies predict the future largely boils down to whether they are bullish on electric vehicles and governments’ commitment to reducing greenhouse gas emissions, said Neil Atkinson, the head of the International Energy Agency’s oil industry and markets division. The IEA projects that global oil demand will increase by nearly 7 million barrels a day by 2023, easily surpassing total demand of 100 million barrels a day.
Atkinson is one of the peak oil demand skeptics, but he held back from dismissing the other side.
“Everyone has a very plausible explanation of why they hold that view,” he said. “We are verging more into art than science. And demand growth is much harder to predict than supply.”
Saudi Aramco CEO Amin Nasser said the adoption of electric cars won’t be quick and more uses for oil will be found.
The transition to electric vehicles will require huge investments in charging stations. And, Nasser stressed, coal will remain the world’s biggest electricity source for years to come. Wind and solar are only pieces of the puzzle.
“We are simply moving emissions from tailpipe to smokestack,” Nasser said.
“We are verging more into art than science.” Neil Atkinson, International Energy Agency