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Page added on May 7, 2020
Arc of peak oil: From empty wells to demand destruction
The world once debated whether oil wells would run dry. Now, with crude flooding the market, the debate has turned to whether oil companies can sell enough of it.
If peak oil is a relic, the question now is if we’ve hit peak oil demand.
The debate, like nearly everything these days, is stoked by the novel coronavirus. Demand has plummeted with much of the world on lockdown. Roughly a third of global oil consumption evaporated in April. The International Energy Agency estimates the world will use 9.3 million fewer barrels a day in 2020 than it did in 2017. That would bring consumption back to 2012 levels.
Ben van Beurden, CEO of Royal Dutch Shell PLC, told financial analysts last week that the recent demand destruction has been so great that “we don’t even know [if] that will come back.”
Oil demand will play a large role in the world’s emissions trajectory. Oil consumption accounts for about a third of global carbon dioxide emissions associated with energy production, a figure exceeded only by coal.
But as emissions from coal have shown signs of declining in recent years, CO2 output from oil has climbed steadily higher. The Global Carbon Project estimates that oil emissions grew at an average rate of 1.4% between 2013 and 2018, while coal declined by 0.5% over that time.
“If we have hit peak oil, it’s great news for climate,” said Nathan Hultman, a former Obama administration official and director of the Center for Global Sustainability at the University of Maryland. “We’ve known for many years that this is a moment that had to happen to have a future that is somehow compatible with the scientific goals of getting to a 2-degree or better pathway.”
It’s unclear if the world has reached that point. Oil’s rebound will depend in large part on how individuals and governments respond to economic chaos wrought by the pandemic. A permanent shift toward working from home or massive stimulus efforts to boost electric vehicles could permanently reduce demand, analysts said.
But today’s low oil prices could just as easily turn consumers away from electric vehicles. Meanwhile, health fears associated with the virus could push city dwellers into the suburbs, leading to more driving.
In recent years, petrochemicals, aviation and shipping have been the main drivers of growth in oil demand, said Alex Dewar, a consultant who tracks energy markets and climate policy at the Boston Consulting Group. Aviation and shipping, in particular, face a potentially long road to recovery.
“Demand growth is highly likely to be slower than it was in the past,” Dewar said. “That in and of itself has big implications and supports the narrative that we’re likely to be in a lower price environment for a longer period of time.”
Oil companies, he noted, are less likely to earmark money for new projects if they foresee little to no growth. Shell executives seemed to indicate as much in the earnings call with investors last week, by saying their decision to cut the company’s dividend was driven in part by the goal of preserving money for a transition to new energy technologies.
“Where it gets interesting is, does a sustained low price environment accelerate a capital allocation shift toward new energies and does that in turn drive a more sustainable shift in the consumption of energy?” Dewar said.
There are plenty of reasons to be skeptical that oil growth is over. Bloomberg reported yesterday that automakers sold more pickup trucks than passenger vehicles in April for the first time, signaling consumers’ enduring taste for gas-guzzling vehicles.
There’s also the role of China, which has driven much of the growth in global oil demand in recent years. The country is already showing signs of recovery in the wake of the pandemic.
Rystad Energy, the Norwegian oil consultancy, expects global demand growth between 2023 and 2025 to slow by roughly 250,000 barrels a day because of the coronavirus. But it also predicts that oil prices will climb in 2025, when current cutbacks in production are expected to result in a supply shortage.
David Victor, who studies climate policy at the University of California, San Diego, is skeptical of predictions that say oil will fail to recover. This isn’t the first time people have predicted that video conferencing would replace work travel and commuting, he noted.
“Grandma still wants to visit the grandchildren,” Victor said. “If the economy recovers, it is highly likely that oil is going to recover to where it was before.”
13 Comments on "Arc of peak oil: From empty wells to demand destruction"
Cloggie on Thu, 7th May 2020 3:30 pm
Solaroad, the integration of solar panels in bicycle roads, is expanding. Here an update 2020, with 7 projects:
https://deepresource.wordpress.com/2020/05/07/solaroad-update-2020/
Solaroad Update 2020
printbabyprint on Fri, 8th May 2020 12:49 am
The real healthy demand for oil has never vanished. The demand ‘ peaked’ because of the constraint of oil supply . Anyone remember 2008 150$ a barrel . Somebody asked for a barrel and couldn’t get it. After that the oil market and capitalism stopped functioning as a supply demand market.
Cloggie on Fri, 8th May 2020 2:06 am
Giant money bag Shell just kicked off the hydrogen economy in the Netherlands:
https://deepresource.wordpress.com/2020/05/08/electrolysis-part-of-hkn-tender/
“Electrolysis Part of HKN Tender”
For the first time in the history of offshore wind tenders, both competitors Orsted and Shell/Eneco suggest that building hydrogen capacity by them will be part of their bid to build the next offshore wind park “Hollandse Kust Noord” (HKN).
All parties involved believe in hydrogen and are willing to invest in hydrogen if they are rewarded with the HKN tender.
Spectacular development! The Netherlands is setting the step to become the #1 hydrogen hub in continental Europe.
Cloggie on Fri, 8th May 2020 4:57 am
“Three Oslo Fjord Ferries are now Electric”
https://deepresource.wordpress.com/2020/05/08/3-oslo-fjord-ferries-are-now-electric/
“New Record Dutch Solar Electricity”
https://deepresource.wordpress.com/2020/05/08/new-record-dutch-solar-electricity/
Davy on Fri, 8th May 2020 5:04 am
Get a spine:
“Moral Vacuum” Exposed – European Leaders Cower In The Face Of China”
https://www.zerohedge.com/markets/moral-vacuum-exposed-european-leaders-cower-face-china
“In Europe, where the pandemic has killed more than 100,000 people and caused economic devastation on a scale not seen since the Second World War, political leaders have been deafeningly silent on demanding accountability from China. While a handful of European officials have agreed in principle that there should be an investigation at some undetermined point in the future, most appear afraid to challenge China directly. The equivocation of European leaders is a reflection not only of Europe’s geopolitical weakness and economic overdependence on China, but also of a moral vacuum in which they refuse to stand up for Western values.”
Davy on Fri, 8th May 2020 5:12 am
A dismal picture of renewables primary power penetration in the US:
“Visualizing America’s Energy Use, in One Giant Chart”
https://www.zerohedge.com/s3/files/inline-images/us-energy-consumption-2019.png?itok=zZBmJm5K
Cloggie on Fri, 8th May 2020 5:58 am
Get a brain:
“While a handful of European officials have agreed in principle that there should be an investigation at some undetermined point in the future, most appear afraid to challenge China directly.”
First investigate, than “challenge”. The US just accuses.
“A dismal picture of renewables primary power penetration in the US”
Sad indeed.
US 6% against EU 20% renewable primary energy.
A 2nd Trump presidency will only increase the difference.
https://www.eea.europa.eu/data-and-maps/indicators/renewable-gross-final-energy-consumption-4/assessment-4
What about Anglo spine?
https://www.theguardian.com/world/2020/mar/30/senior-who-adviser-appears-to-dodge-question-on-taiwans-covid-19-response
“This article is more than 1 month old
Senior WHO adviser appears to dodge question on Taiwan’s Covid-19 response”
Cloggie on Fri, 8th May 2020 6:26 am
A real battery breakthrough:
https://deepresource.wordpress.com/2020/05/08/elestor-50-kw-hydrogen-bromide-flow-battery/
“Elestor 50 kW Hydrogen-Bromide Flow Battery”
Extremely cheap flow battery operational in the Netherlands. At 100 kW and 250 kWh, storage cost at world record low of 5 euro cent/kWh.
Disadvantage: it’s bulky, think a sea-container. Not exactly a saxy Tesla power wall and hence not something for in your garden. Typical application: shabby gated industrial terrain, a lot of solar panels on the roof and a container-sized battery to guarantee 24 hours supply of electricity (provided the sun shines).
The low price/kWh is a result of extreme reliability, almost zero degradation and endless life cycles.
Davy on Fri, 8th May 2020 6:37 am
“Sad indeed. US 6% against EU 20% renewable primary energy.”
LMFAO and you call 20% not dismal!!!
All I hear out of you is the future of 100% renewables, too cheap to meter, and kw=kw nonsense. What a friggin joke you are.
Davy on Fri, 8th May 2020 6:38 am
bullseye:
“1996 Court Filing Corroborates Biden Accuser’s Claim She Was Harassed”
https://www.zerohedge.com/markets/1996-court-filing-corroborates-biden-accusers-claim-she-was-harassed
“A court declaration from 1996 corroborates former Biden staffer Tara Reade’s claim that she was sexually harassed while working for him in 1993, according to the Sacramento Bee. The filing – made by Reade’s ex-husband Theodore Dronen while contesting a restraining order she filed against him days after he filed for divorce – reveals Reade told him about “a problem she was having at work regarding sexual harassment, in U.S. Senator Joe Biden’s office.” It appears to be the only written record that has surfaced from the time that substantiates Reade shared her account in the years following the alleged incident, though a former neighbor came forward last week about similar conversations she said she had with Reade in 1995. In the filing dated March 25, 1996, Dronen testified that he met Reade in the spring of 1993 while the two worked for separate members of Congress in Washington, D.C. Dronen wrote that Reade told him she “eventually struck a deal with the chief of staff of the Senator’s office and left her position.” “It was obvious that this event had a very traumatic effect on (Reade), and that she is still sensitive and effected (sic) by it today,” Dronen wrote. -Sacramento Bee”
Cloggie on Fri, 8th May 2020 6:49 am
LMFAO and you call 20% not dismal!!!
All I hear out of you is the future of 100% renewables, too cheap to meter, and kw=kw nonsense. What a friggin joke you are.
No, I don’t call 20% “dismal”. Changing energy base is a gigantic task. It took the US 70 years to build a fossil fuel infrastructure.
What is you don’t understand about the word “future”?
20% now, 100% in 2050.
Never said anything else.
You are just green with envy that you have missed the boat and that we will have all the skills, industries, patents, networks. European renewable energy is going to rule the world. Most wind turbines in the US are built by Europeans.
#FourMoreYears.lol
Gorbachev: “He who comes too late is punished by life.”
l on Fri, 8th May 2020 8:50 am
after some quick tard research on whitey supertard president mike flynn i’ve comparatively lost all love for the super goat permacultist
whitey supertard president flynn wants to get all muzzies starting with muzzie imams amputated
he said he sat across from highly educated and truly barbaric muzzies (i’m sure they’re not muzzies) and he understood the threat.
there are men like this that keep us safe while there are others who hole up in 10 000 acres and advocate the virtue of goatse
e on Fri, 8th May 2020 9:20 am
form energy is going for $10/kwh or about 10.5 days for a typical household load for a 250kwh system. it’s a flow system using sulfur and some other stuff so i assume sulfer is abundant. it’s bulky but for grid system it’s not big of a problem. i also read about a quick charging technology that shines a laser and allow the material to absorb grater current to cut down on chargig time