A new report says worldwide oil demand will peak in 2029. Some oil industry observers are skeptical.
A new report says worldwide oil demand will peak in 2029. Some oil industry observers are skeptical.
Global oil demand will peak before the end of the decade, according to a new report from the International Energy Agency. That moves the date of the projected peak from 2030 back to 2029.
The oil cartel OPEC, by contrast, predicts the peak won’t come until 2045, and critics of the IEA say its new estimate is overly optimistic. So which one’s estimate is more likely to be right?
It’s tough to get energy experts to confidently predict when oil demand will peak, much less agree about it.
“Historically, when you look at projections of of peak oil demands, they’ve usually turned out to be wrong,” said Hugh Daigle, who teaches petroleum engineering at the University of Texas at Austin.
He’s not confident in the 2030 prediction, “just because you have to make so many assumptions.”
And every assumption you make can change the result that the model produces.
“Anyone who models the energy system would be familiar with the huge range of results that we see, the uncertainty we see, the volatility we see,” noted Morgan Bazilian, who teaches public policy at the Colorado School of Mines.
Like when oil prices plummeted at the beginning of the COVID pandemic or shot up when Russia ratcheted up its invasion of Ukraine.
Regardless of whether oil demand starts declining in 5 years or 15 years, it will peak at 100 million barrels per day, said Bazilian. That means petroleum will continue to be a massive industry past 2029.
“It’s important to keep in mind that a peak does not necessarily mean a rapid precipice. It much more likely looks like a slow decline, and that, you know, if it is a slow decline, is much easier to manage than a precipice,” he said.
Then, there’s what may be the biggest variable of all: what’s going to happen in developing countries. That’s where the world will see the most population growth and therefore the most growth in energy demand.
“And so you need energy that’s as dense and cheap as possible and available as possible today — that’s fossil fuels, unless we have this massive substitution on a global scale,” said sustainability advisor Karl Pettersen of Pettersen Consulting.
Subbing clean energy for fossil fuels in those countries is going to depend on whether their infrastructure can handle it, and if not, what it’ll cost to get them there, Pettersen added. But those may be moot questions if oil prices decline once demand starts to fall.
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