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Page added on November 16, 2016
IEA Sees Peak Oil Demand After 2040
Global oil demand won’t stop growing before 2040 despite pledges made at the Paris climate change summit last year to cap greenhouse-gas emissions, the head of the International Energy Agency said.
IEA Executive Director Fatih Birol’s comments have added to a debate over when oil consumption—which has steadily grown for decades—will begin a sustained decline, a change known as peak demand. Royal Dutch Shell PLC’s Chief Financial Officer Simon Henry caused a stir earlier this month when he said the company believes demand for oil could stop growing within the next two decades and as soon as five years.
Mr. Birol said demand will keep rising for longer because there are currently scant alternatives to oil for road freight, aviation and petrochemicals, despite increasing investment in renewable energy.
Even efficiency gains in petrol engines and an increase in the number of electric vehicles on the road won’t be enough to halt a rise in oil demand, he added.
“The era of fossil fuels appears to be far from being over,” Mr. Birol said.
ENLARGE Mr. Birol’s remarks were made as the IEA publishes its annual report, forecasting global energy supply and demand to 2040.
Oil companies have started to look at a future in which consumer demand for their core product could stop growing due to climate policies and efficiency gains.
“We’ve long been of the opinion that demand will peak before supply,” Mr. Henry of Shell told analysts this month. “And that peak may be somewhere between five and 15 years hence and it will be driven by efficiency and substitution.”
Saudi Arabia, the world’s largest exporter of crude oil, has begun preparing for a day when oil is no longer the dominant fuel. The kingdom is planning to publicly list a small piece of its giant state-run petroleum company, Saudi Arabia Oil Co., and use the money to invest in developing its economy away from crude.
However, Saudi Arabia hasn’t put an estimate on the timing of peak demand.
Oil demand could peak by 2020 if a more stringent approach on climate change is taken, the IEA said, something that is looking increasingly unlikely after the election of Donald Trump in the U.S. The president-elect has called climate change a hoax and has said he would withdraw from the Paris deal.
Government officials from dozens of countries are working this month in Morocco to implement curbs on emissions agreed last year in Paris. Even if successful, that effort may not be enough to quickly slow down crude-oil consumption, Mr. Birol said.
“Today 81% of global energy comes from fossil fuels and in 2040, even if all the pledges are implemented, this share will go down to 74%.
Under the IEA’s central scenario in its World Energy Outlook to 2040, global oil demand is set to grow almost 12% to 103.5 million barrels a day in 2040, compared with 92.5 million barrels a day in 2015.
Oil demand is set to fall more quickly in the Organization for Economic Cooperation and Development, a group of countries with advanced industrial economies, but this reduction is more than offset by increases elsewhere. India is set to become the leading source of growth, while China will overtake the U.S. to become the single largest consuming country in the early 2030s, the IEA said in the report.
12 Comments on "IEA Sees Peak Oil Demand After 2040"
Davy on Wed, 16th Nov 2016 6:17 am
The fallacies of projecting out to 2040 are bizarre and should give intelligent people pause. The problem is these high paid modern enteral readers with suits and clean finger nails have to do that. Why would we pay them anything if they just came out and said we cannot predict further out than 3-5 years and after that the situation looks like a die off? Why pay them so much to tell us so little. We pay them so much to tell us we will be alright and the fact they use fancy words and have suits on makes it so. So in effect our social narrative of market based capitalism and global liberal democracy is perpetuated by a required deception. Many of these people understand how dire this situation is but they are required to offer solutions and some kind of optimism especially with advertising dollars involved. Offering the cold hard truth is not an option if the truth is failure and a die off.
It doesn’t matter anyway because there is nothing that can be done. There will be some winners and some losers. We may buy some more time or maybe end up with less. The fact is this macro systematic momentum of the “Ecos” and modern man is decay. This is destructive change that no amount of spin can improve. This process is above man and his actions even though he is a primary player in this tragedy.
We can improve people’s current emotional wellbeing. A significant amount of the world’s people are only at a basic intellectual level so is it wrong or right to humanely lie to them about the real truth? Many of us can’t handle the truth if the truth is failure. We are told we have to have hope and we have to try. Ok, have your hope and try if it makes you feel better.
I am concerned about the truth and finding meaning in the truth. Whatever that brings is what I am seeking. If you think I am not scared then you are wrong. I sometimes find comfort in the truth but most of the time I am like everyone else when facing the idea of death and that is naturally being unsettled by the idea. Let’s all sit down in a group and talk about dying, yea, that is a bowl of cherries. Again, I have no answers other than this you can face the truth or turn your back on it and a thousand different shades of that action. In regards to this article this shit is junk. Reaching out to 2040 with trends is shit in a world like we live in with so many converging problems. There, that is my stab at the truth. Wow, I feel better, lol.
eugene on Wed, 16th Nov 2016 7:50 am
Agreed!! I’m the same way.
Apneaman on Wed, 16th Nov 2016 11:09 am
2040 ha! I can god damn guarantee ya that the population clock will have been rolling back long before 2040, so if there is any oil industry left to sell to any civilization that is left, then ya, demand will be down.
World could face oil shortage by end of decade, says IEA
International Energy Agency warns of future instability as low price of Brent crude deters investment in new oilfields
https://www.theguardian.com/business/2016/nov/16/world-oil-shortage-international-energy-agency
penury on Wed, 16th Nov 2016 11:17 am
everyone has their own prediction, Depending on what they are selling the timelines vary, the truth I hate to say it isn’t known to anyone posting here. Yes, what they say usually makes sense, however most of the extropulations are almost Walt Disney in facts. Easier to just say the end is like porn, I will know it when I see it.
rockman on Wed, 16th Nov 2016 12:12 pm
And again posted a response before this more appropriate thread popped up:
, 16th Nov 2016 9:20 am
Revi – “…peak demand”. What does that mean anyway?”. Exactly. Seems like we have to beat this dead horse again every month or so. Back to the basic question: what is PD and how is it measured? Obviously it can’t be how much oil the consumers WANT to consume. Essentially that almost infinite. When you look at the verbiage used by folks talking about PD it’s seems clear they are talking about how much oil consumers are actually buying. Which is essentially how much the can afford to buy since the economies always want more and more energy.
Thus there are two limits to PD: how much oil is available for production and how much oil can the economies afford to buy. But those aren’t independent dynamics. Obviously when oil prices were higher the KSA wasn’t producing at its max capacity: the buyers couicouild afford to buy more oil at those prices. And it shouldn’t be a shock that at much lower prices the consumers can afford that extra production.
For sake of argument let’s assume global production is at or very close to max. If so even if prices dropped 50% and the consumers could afford to buy more they couldn’t… production has maxed out.
So if consumers aren’t able to buy more oil at least in the short term wouldn’t that put us at PD? And in the longer terms? It seems clear that with the collapse of the rig count and cancelation of $trillions in drilling capex it seems likely little new production capacity will come on line. But as we all know depletion, like rust, never sleeps. Without replacing 100% of production that capacity will decline.
Which actually doesn’t guarantee higher oil prices. Hypothetical: max global oil production capacity drops 10 mm bopd to 85 mm bopd. Would that forces prices to $100/bbl? If the global economy can’t afford to pay more then $45/bbl for those 85 mm bopd then the price of oil will be $45/bbl. Of course if there are economies that can afford a higher price they’ll get the 85 mm bopd.
Which explains why producers today have no choice but to sell as much oil as possible st $45/bbl in order to max their revenue.
Today the world is producing a record volume of oil. But even at $45/bbl there are still economies that can’t afford the current price. Which is understandable: oil prices ARE NOT CHEAP. They are just cheaper then they were a couiple of years ago. But still higher then they were 10+ years ago. In fact almost 3X what they were in 1998.
Thus IMHO, thanks the modulation effect of pricing, whatever the global oil consumption might be at any point in time demand is at its max. Which means that in theory we could be at PD today. Which seems to imply that PD and PO will occur on that same relatively unimportant date.
Boat on Wed, 16th Nov 2016 3:32 pm
Davy,
Who said Eia employees get paid much. It is a general rule the government pays less than the
sector. These employees are mandated to make assumptions according to methodologies not necessarily of their choosing.
I also think your wrong thinking they are required to paint a rosy picture. They follow the formula given until congress or some high ranking breacrat changes it.
Davy on Wed, 16th Nov 2016 4:14 pm
Boat, please find out how much Mr Briol is paid and get back to me. You see that suit he is wearing? It does not look like he is hurting for money. In any case you didn’t get the point of my comment. Lighten up and expand your imagination and maybe you will experience an enlightened understanding of a new paradigm in the making.
rockman on Wed, 16th Nov 2016 4:25 pm
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rockman on Wed, 16th Nov 2016 4:35 pm
Davy – They don’t provide his salary but this is interesting:
However, Mr Birol who has previously worked at Opec, could prove to be a controversial candidate with some of the IEA’s governing board due to his former links with the oil producing cartel, which controls a third of the world’s supply.
Mark Ziegler on Wed, 16th Nov 2016 4:46 pm
Please remember that when demand peaks, growth in the economy peaks permanently.
makati1 on Wed, 16th Nov 2016 6:00 pm
Common engineers in IEA make over $100K./year. The chief’s salary is a secret, but I would guess it is in the low to mid 7 figures range and maybe higher. A good reason to bullshit to keep your job.
Sissyfuss on Wed, 16th Nov 2016 9:58 pm
With a pay and benefit package like that no wonder we’re 20 trillion in debt.
KEEP PRINTING!!!