The Stone Age didn’t end because we ran out of stones 🙂
The world of energy is changing with a new concept becoming part of the mainstream: “peak oil demand.” It’s the point at which oil consumption reaches its highest level and then begins to decline. The timing may be uncertain, but many companies, analysts, and experts believe it will come sometime in this decade.
Forecasts on Peak Oil Demand
The big energy institutions have brought out varied forecasts as to when the demand for oil may peak. For instance, the International Energy Agency (IEA), believes it will be sooner than the mid-2020s, while BP in its Energy Outlook places this time at around the early 2030s.
Equinor is one of the leading Norwegian energy companies; its pre-2030 timeline puts electric vehicles (EVs) in the lead pack to make a dent in the consumption of oil. EVs, while dampening demand, will make road transportation likely the largest single end-user of oil-based products well into the coming decades.
Meanwhile, McKinsey & Company, a global consulting firm with strong ties to the fossil fuel industry, predicts that oil demand may peak later in this decade. It does qualify that an earlier peak is possible due to faster adoption of renewable energy and associated technology improvements.
Counterarguments: The Case for Delayed Peak Demand
Contrasting these projections, some companies find that peak demand is still far away. For example, ExxonMobil has projected the steady increase in oil consumption through at least 2040. The U.S. Energy Information Administration (EIA) similarly indicates that growing demand in emerging economies may support growth for longer than expected.
Implications of Surplus Oil
No matter when peak demand finally arrives, one thing is certain: there will be plenty of fossil fuel still in the ground. That surplus could spell economic woes for fossil fuel-dependent countries, a rebalancing of global trade relationships, and more clamor to repurpose existing infrastructure to produce renewable energy.
With more electric cars, renewable energies, and efficiencies, there’s no way to avoid the oil transition. It is a future that must come with a balance to economic, environmental, and social implications. Perhaps the oil age is coming to an end; its legacy and surplus will make the energy industry for decades.
Reference- McKinsey, International Energy Agency (IEA), BP’s Energy Outlook, ExxonMobil, US Energy Information Administration (EIA), Medium article