Is Peak Oil Demand Close?
by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas
Is peak oil demand close?
The answer to that question is an emphatic no, according to Ellen R. Wald, the President of Transversal Consulting, who told Rigzone that “global energy demand continues to grow and there is no way to generate energy as reliably and as efficiently as hydrocarbons”.
“Therefore, hydrocarbon use will continue to grow,” Wald said.
Responding to the same question, Alex Stevens, the Manager of Policy and Communications at the Institute for Energy Research, told Rigzone that “it’s extremely unlikely that we are anywhere close to peak oil demand”.
“The individuals and organizations that are predicting peak demand make assumptions about the feasibility of renewable energy, electric vehicles, and public policy that are extremely unrealistic,” he added.
“It is already clear to any reasonable person that the net-zero policies that have been pursued in some countries have been a complete disaster … It will take some time, but eventually, net-zero will become a political liability, and eventually, those policies will be rolled back,” he continued.
“Apart from that, hundreds of millions of people in the developing world still lack access to affordable and reliable energy. As those countries develop, they will contribute to the growing demand for oil and natural gas,” Stevens went on to state.
Stevens also told Rigzone he would bet that oil and gas producers will continue to find new ways to produce those resources at lower costs while minimizing their impact on the environment.
Offering his view, Al Salazar, the Head of Macro Oil and Gas at Enverus Intelligence Research (EIR), told Rigzone that “peak demand feels farther away than what we had originally anticipated”.
“OPEC anticipates global oil demand to hit ~112 million barrels per day by 2030, the IEA estimates it to be ~105 million barrels per day. EIR’s most recent estimate is close to the IEA estimate. However, we are currently reassessing this view,” he added.
In his response to Rigzone, Salazar outlined that U.S. electric vehicle momentum “appears to be having trouble accelerating at the exponential rate historically required of a disruptive technology”.
“This is due to a variety of reasons i.e., range anxiety, cost, consumer preference. However, China and EU electric vehicle sales are still on track with our expectations,” he added.
Salazar also noted that “global gasoline demand in 2023 has surpassed pre-Covid levels (2019), according to IEA figures”.
“Accelerating electric vehicle sales, tightening fuel economy standards, and work from home trends have failed to curb gasoline demand,” he said.
The EIR head also told Rigzone that the impact of single use plastic restrictions and recycling targets “are very difficult to accurately assess”.
When Rigzone asked Stephen Ellis, an energy and utilities strategist for Morningstar Research Services LLC, if peak oil demand is close, Ellis noted that the challenge with forecasting a peak in oil demand is that not all of the demand for oil is linked to displacing light-duty cars with electric vehicles.
“Trucking, ships, and planes, and petrochemicals are also influential,” he added.
Ellis told Rigzone that the decline in oil demand “is not going to be as rapid as some expect, as substitutes for oil for planes and ships seem very challenging, and petrochemicals (plastics demand) should be stronger than expected for longer”.
“We expect oil demand to peak around 2030, but the decline is likely to be far slower than most expect,” he said.
One of Rigzone’s regular market watchers told Rigzone, on the condition of anonymity, “I do not believe that peak oil demand is close at hand”.
“The IEA has forecast peak demand by 2030 but right now I see peak demand happening beyond this date,” the market watcher stated.
“I base my assumption primarily on the continued growth of non-OECD oil demand. Countries such as India, in addition to China, southeast Asia, and the Middle East are continuing to growth their petroleum consumption,” the market watcher added.
“In addition, specific industry segments such as petrochemical and various transport demand continue to grow (as we have seen the post-pandemic resurgence of aviation/jet fuel),” the watcher continued.
Conversely, the market watcher noted that “we are seeing continued structural impact on demand in the transport sector from the gradual rise of electric vehicles, in addition to other factors such as increased fuel economy, use of more biofuels, hybrid working, etc.”.
“Global diesel demand remains intact with a host of users in industry, transport, and electric generation. Gasoline consumption will be very important to watch but even here, the near-term anticipated decrease may be less than expected,” the watcher added.
The market watcher said geopolitical pressures will also keep pressure on global oil supply, “perpetuating the bifurcated market rather than a more free and open market”.
“This will impact crude export vectors, import dependencies and prices for key grades such as Brent, the OPEC basket, and Urals,” the watcher added.
“The U.S. will continue to play a growing role as a global fuel exporter even though industry consolidation continues to make the shale universe more compact,” the watcher continued.
“A combination of market pressures, political economics, energy security, and technology will likely guarantee that predicting peak oil demand will remain just as challenging as it always has been,” the watcher went on to state.
In a J.P Morgan report sent to Rigzone recently, which outlined the company’s oil outlook over 2024 and 2025, the company noted that it doesn’t see peak oil demand on the horizon and added that demand growth “should be increasingly driven by petrochemicals and air travel at the expense of traditional oil products like gasoline, diesel, and fuel oil”.
“Accordingly, the share of refined oil products will likely account for 88.4 million barrels per day, or 85 percent of oil demand in 2025, with the balance coming from natural gas liquids and biofuels,” the company added in the report.
by Andreas Exarheas
click here to read the original article at Rigzone.com
*this article was not written by Roseland Oil & Gas