The World Is Millions Of Barrels Away From Peak Oil
From #OilPro -- The notion that demand for crude oil will soon peak has largely replaced the idea from a decade ago that crude oil production was about to peak for geological reasons. This new idea is that we will no longer need oil (or at least a lot less of it) because consumers will choose alternatives to oil.
But actual oil consumption numbers suggest that peak demand for oil won’t happen soon, and when it does happen it will do so at a demand millions of barrels/day higher than current demand.
Proponents of peak demand expect that exponential growth in electric vehicles (EVs), and to a lesser extent an increase in biofuel production will send oil demand into permanent decline. In fact, nearly 1.5 years ago Bloomberg suggested that at a continued annual growth rate of 60%, EVs could displace 2 mbd of oil by 2023. At a 30% growth rate, 2 mbd would be displaced by 2025.
The key problem with the Bloomberg scenario is it treats oil demand as stagnant, which results in the assumption that in 2023 the displacement would take place from current demand levels. In other words, if 2016 demand was 95 mbd, the Bloomberg scenario presumes 2023 demand at 93 mbd (and falling yearly). The flaw in the scenario is that for over 30 years average oil demand has grown each year by more than 1 mbd. Over the past decade, oil demand has grown each year by 1.1 mbd. Over the past 5 years, 1.4 mbd. The BP Statistical Review shows oil consumption grew by 1.6 mbd last year.
Oil consumption in 2016 represents a new all-time high in global oil demand and occurred despite the fact that global EV sales grew at a 41% rate in 2016 to reach nearly 800,000 vehicles. The growth over the past decade also took place during a time that global biofuel production increased by over a 1 mbd.
Underlying oil demand is growing for several reasons. The population is growing, the middle class is growing, automobile sales in developing countries are growing at a blistering pace, and the number of miles driven is reaching all-time highs.
The implications are clear with respect to the peak demand argument.