Is this the beginning of the end of the oil age? Are we finally falling out of love with black gold?
The end may not be coming not because we are running out of it, but because demand is alowly decreasing through increased energy efficiency. It will not be sudden, but a death of a thousand cuts.
According to Tony Hayward, the CEO of BP, consumption of oil in the developed world fell by 1.6 per cent last year, the largest drop since 1982. More importantly the decline is set to continue.
Mr Hayward’s prediction of weakening demand coincided with the publication of BP’s energy bible, the BP Statistical Review of World Energy. For the energy geeks amongst you, this showed that, for the first time, total energy demand in poorer countries, including China and India, exceeded that of the Organisation for Economic Co-operation and Development (OECD).
The West and in particular America is slowly falling out of love with oil, in part due to the recession and higher oil prices of a year ago. Take the American love of the automobile. Consumers are slowly buying more efficient vehicles or even driving less. The interesting thing from BP’s perspective is that it does not expect this to change once the American economy picks up.
Once you have down-graded from an SUV you are unlikely to upgrade again. “BP is unlikely to sell more gasoline to Americans than it sold in the first half of 2008. Energy efficiency means demand from OECD countries will continue to decline,” said Hayward.
According to BP there were 1.258 trillion barrels of proven oil reserves left in the ground, enough to supply the world for over 40 years at present production rates. “Our data confirms that the world has enough proved reserves . . . to meet the world’s needs for decades to come,” Mr Hayward said, adding that constraints on production were “human, not geological”.
One of the big issues will be fact that many climate experts believe the climate cannot cope with another 40 years of burning oil, especially unconventional oil like dirty tar sands.
Some believe the figures don’t match up. Will Whitehorn, who chairs a UK industry task force on peak oil and energy security, told the Times newspaper they were overoptimistic: there may be far less oil. “Many of the reserves figures are overstated,” he argues.
Over–stating reserves? Where have we had that one before?
Better ask Shell not BP on that one.