Analysts and experts in the global energy sector have long debated the prospect of peak oil demand. This is an issue that has long caused debate, some of which can be emotionally charged among parties with significant investments on either side.
In recent years, these stakeholders have risked developing a case of whiplash as they weigh competing views on this “peak oil” issue put forth by OPEC and the International Energy Agency (IEA). (Related: David Blackmon: Why policymakers should reject the IEA's stupid peak oil concept)
The IEA has spent the past 12 months predicting the arrival of peak oil sooner than most other experts expected, saying it will occur sometime this decade, or by 2030 at the latest. Not surprisingly, IEA analysts say: doubled The forecast is set out in the latest monthly oil market report.
In a section entitled “When the Music Stops,” the IEA focused on short-term factors such as slowing demand growth in China, where oil consumption has fallen year-on-year for the past four months. Noting that Chinese demand growth has slowed to an estimated 180,000 barrels per day (bpd) through 2024, the agency lowered its estimate of global demand growth to 800,000 barrels per day (bpd), citing that data point. .
The section also pointed to an isolated slowdown in U.S. gasoline deliveries growth in June (a fact that could be just statistical noise) as support for the full-year growth forecast. However, given that economic growth has slowed through 2024, it is not surprising that oil demand growth will slow. This phenomenon of direct causation has been a consistent aspect of oil markets throughout history. This is also a short-term factor, the impact of which will ultimately be mitigated by subsequent events.
In contrast, OPEC's forecasts over the past year regarding near-term global demand growth and the expected peak in oil demand have reached the opposite conclusion. Last summer, the cartel predicted that global oil demand growth in 2024 would rise significantly to 2.25 million barrels per day. OPEC analysts have revised down their initial forecasts in the past two months as economic growth has slowed, but output remains at 2.1 million barrels per day. This is more than double that of the IEA and the US Energy Information Administration (EIA).
Regarding the concept of peak oil demand, OPEC remains even more bullish on oil, stating that there is no prospect of reaching that threshold during the forecast period to 2050. annual world outlook According to a paper published last week, OPEC expects oil demand to rise to 120 million barrels per day in the same year, an increase of 18 million barrels per day from current levels.
“What this outlook highlights is that fantasies of phasing out oil and gas have nothing to do with reality,” OPEC Secretary-General Haitham Al-Ghaith said in the report's foreword. Ta.
Mr. Al Ghaith also pointed out the following facts: “Over the past year, the world has learned that new energy sources can only be phased in at scale if they are truly ready, economically competitive, accepted by consumers, and have the right infrastructure in place. This is a place where I have deepened my awareness of this. “This undeniable reality means that predictions that oil demand in the transportation sector will be crushed by alternatives such as EVs and hydrogen vehicles are almost certainly too optimistic. Market demand for EVs is rapidly declining. This strongly supports this possibility. (Related: David Blackmon: There's a reason big oil is still investing in wind and solar power)
Al Ghaith also argues that “realistic demand growth forecasts require appropriate investments in oil and gas today, tomorrow and decades into the future.” This assertion is in contrast to an IEA report published in May 2021. In this report, IEA Director-General Fatih Birol called for an immediate halt to all new investments in the discovery and development of new oil resources to combat climate change. By August of that year, Bilal was comically urging oil companies to increase oil production to restore balance to an undersupplied global market.
Episodes like this have left many wondering whether the IEA's predictions about the oil market are based on data or wishful thinking. The legitimacy of such questions was first reinforced by Birol. announced earlier this year The agency's mission is expanding to include intensive advocacy to accelerate the energy transition.
So who is right? As we'll find out in 2030, the smart money is with the group with billions of dollars riding on the answer.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, specializing in public policy and communications.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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