Peak Oil is You
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Page added on November 5, 2015
‘Peak demand’ Means World May Never See Oil at $100 a Barrel Again
Just as the energy industry has brushed aside concerns that the world could run out of oil, industry executives now say they believe it is demand, rather than supply, that is nearing its apex.
In 1985, Ian Taylor, today the chief executive of the world’s largest oil trader Vitol, was part of a team at Royal Dutch Shell that forecast oil prices would rise five fold to $125 a barrel in 2015 as global reserves were expected to become more scarce. Now he says it is unlikely to ever reach those levels again.
Oil today stands at around $50 a barrel, having more than halved since June 2014 after global supplies dramatically rose due in large part to the U.S. shale oil boom but also due to the unlocking of huge offshore reserves in Brazil, Africa and Asia.
“We all talk about ‘peak supply’ and maybe with shale that is becoming a disabused concept. I have begun feeling that… we are coming to peak demand towards 2030,” Taylor said on Wednesday at The Economist Energy Summit in London.
“I believe we may not see $100 (a barrel) ever again,” Taylor said.
Such forecasts come at a time when oil companies have slashed billions off their budgets and scrapped more than $200 billion of oil and gas projects to cope with the sharp price drop.
Lower future demand for fossil fuels could wreck the finances of producing countries like Saudi Arabia, Russia and Venezuela that depend on high oil prices to fund public spending, but would be an overall boon for the world. The overwhelming majority of people live in countries – whether rich like the United States, middle-income like China or poor like Bangladesh – that consume more energy than they produce.
The United Nations believes sharp reductions in fossil fuel use are also necessary to protect the earth from catastrophic effects of climate change.
Higher fuel efficiencies for cars and the industry’s switch towards less-polluting sources of energy such as gas, biofuels, solar and wind power, mean that oil demand could plateau in the coming decades. Fossil fuel consumption could be further clipped if governments tighten regulations in order to combat climate change at a U.N. conference in Paris next month.
BP earlier this week said the world is no longer at risk of running out of oil or gas for decades ahead. Existing technology is capable of unlocking so much fossil fuel that global reserves would almost double by 2050 to 4.8 trillion barrels of oil equivalent (boe), the British giant said.
With new exploration and technology, the resources could leap to a staggering 7.5 trillion boe, it said.
Back To The Past
“Peak demand” does not mean people will consume less energy overall. On the contrary, global energy consumption is expected to soar in the coming decades as the planet’s population grows and Asian and African economies develop.
But while the world’s total energy consumption is set to increase by more than one third from 2012 to 2040, oil’s share is set to shrink from 31 percent to 26 percent, according to the International Energy Agency’s 2014 World Energy Outlook.
The IEA forecasts global oil demand to rise modestly by around 0.5 percent per year through to 2040 to 103.9 million barrels per day, driven by non-OECD countries.
Eldar Saetre, Chief Executive Officer of Norwegian oil compnay Statoil, sees oil demand actually declining, although oil companies will still have to invest to replace existing capacity as it declines.
“In our scenario, we see much lower oil consumption than we have today,” he told reporters on the sidelines of the conference.
“You still need a lot of additional (oil) capacity because of natural decline… Overall, we see the same type of combined levels for oil and gas but lower oil and more gas.”
The change is expected to hit Western economies first, with demand set to go back to levels last seen in 1966, according to Dev Sanyal, BP’s Executive Vice President, Strategy and Regions.
“We do believe the aspect that people were set about 25 years ago, which was peak oil, has now clearly gone away. There is a lot of supply of both oil and gas. The big challenge in OECD economies is peak demand.”
Still, some firms are expecting robust demand in developing countries will keep the world’s thirst for oil strong. The President of New Energies at France’s Total, Philippe Boisseau, said he did not expect global demand to plateau, even though OECD consumption is likely to decline.
“Even when including the huge efficiency efforts, (oil demand) will grow. So I don’t believe in peak demand for the world. For Europe and the West, maybe, but not for the world.”
7 Comments on "‘Peak demand’ Means World May Never See Oil at $100 a Barrel Again"
Davy on Thu, 5th Nov 2015 7:36 pm
More corn porn from rigporn. Reality is now not in 20 years. Claiming overall energy use will rise because population will rise are both simple spreadsheet goal seek activities. Both are the current social narrative and part of the cornucopian manifest destiny doctrine of development and technology. Can you imagine a cornucopian claiming anything else? No.
We are seeing clear signs the rate of growth is stalling. We have a hyper complex economy that can hide this through the finance and service sectors. Real production, physical trade, and physical development tell a different story. We have a minimum operating level of growth that is not being met. We are told differently but that does not mean it is true.
If demand is really dropping then supply potential will drop. This is not about gross numbers in isolation. This is about relationships within a complex global economy. The range that facilitates the best for all economic segments is not what we have now.
Energy will likely not be coming from renewables to substitute for fossil fuels. We are not seeing scale with the time frame nor the quantity to head off entropic decay to the entire system. These energy sources are in a relationship of demand and supply. They act upon each other. This global energy relationship is clearly in decay with economic instabilities and depletion of the quantity of quality.
We are at the beginnings of a bifurcation event. Since this is a big world and a large global economic system this event is now scattered events but these will converge eventually into a recession, depression, and or economic collapse.
This will occur at some point beyond predictions because the only thing keeping this sucker going is human confidence. You take away that and things grind to a halt. Confidence is held together now by manipulation, corruption, and outright lies. We are fed, have lights, and the frig has food. What happens when any of those basic rights change? Right, you get my point.
marko on Fri, 6th Nov 2015 1:26 am
I agree with you . I always taught that the oil prices will skyrocket and that will bring the collapse but no, collapse will be wrapped up in fine mesh of social economical events, and it will take time it is certain.
MrNoItAll on Fri, 6th Nov 2015 1:55 am
Speaking of peak demand, I wonder if that has anything to do with the fact that oil companies are in the process of crashing and burning, big time. Where the hell are we going to get our energy to keep this global economy propped up? I suspect that they’re going to have to squeeze some people out of economic participation and into meager handouts and bare survival mode — a LOT of people. Ha! As if they aren’t already in the process of doing that. Hope you have a good job or a debt free existence — or both (like me! — almost…).
Giant Sucking Sound of Capital Destruction in US Oil & Gas
http://wolfstreet.com/2015/11/05/giant-sucking-sound-of-capital-destruction-in-us-oil-gas-impairments/
P.S. Nony, come back and tell us about nat gas futures — we want to hear all about it. Plant, let’s go back to your prediction that fracking in Argentina is ready to really get going — do tell. Hey, where did all the cornies go?!!
Davy on Fri, 6th Nov 2015 5:22 am
MR, exactly, “where have all the cornies gone?”
https://www.youtube.com/watch?v=ZgXNVA9ngx8
tita on Fri, 6th Nov 2015 5:40 am
Once again, this peak demand bullshit, raised from the western perspective. If global energy consumption is set to raise and oil price is set to stay in the 40-60$ range (as this article states), what is the reason for not using oil to feed our future energy needs?
The last two paragraphs explain well the western illusion of a reduced need of oil. This need was transferred to other parts of the world, thanks to global market. Global demand stall when price is high long enough to hurt global finance with unsustainable debt. On the other side, global production stall when price is low long enough to hurt the finance and debt behind oil industry.
The question is how long is this “long enough”. 1 year? 10 years? Somewhere between. Just impossible to predict. But this cycle went on for the last 40 years, no reason for it to stop now with a continous falling demand.
marmico on Fri, 6th Nov 2015 6:19 am
My arm gets sore picking up and heaving the acorns back at the Henny Penny’s. -:)
shortonoil on Fri, 6th Nov 2015 7:21 am
Depletion not only means a reduction in resource available as it is extracted, it also means a reduction in its value. As assuredly as an iron bolt will rust in the weather, or a cup of hot coffee will cool on a table the value of petroleum will go down. That is the conclusion that can be derived from the most inescapable premise know in the universe!
The entropic decay of the petroleum production system has now reduced the value of petroleum below the cost of producing much of it. The world is now flooded with petroleum that it can not afford to use. The result is that sovereign nations are going bankrupt, and the industry is shrinking in response:
http://www.zerohedge.com/news/2015-11-05/giant-sucking-sound-capital-destruction-us-oil-gas
The value of petroleum will continue its journey to zero, and the price will follow. Attempting to deny this inevitable conclusion will be as futile as denying that the sun will continue to travel across the sky.
http://www.thehillsgroup.org/