Various blogs on the site over the last few months have warned about what peaking global demand will do for the oil industry.
Last August in the blog “What About the Demand-Side Warning?” we quoted Lorne Stockman, the author of report on how reducing oil demand might affect the tar sands.
Stockman said that the time “A peak in oil demand was barely discussed even a year ago, but now it is a viable idea. When it happens, I wouldn’t want to guess, but it will happen sooner than we thought. There has been lots of talk about a supply peak, but it is good to start talking about a demand peak, and that has huge implications for these companies.”
Many have been dismissing peak demand as something that would happen decades away, but now we have it from the horse’s mouth that its sooner than we think.
The CEO of BP, Tony Hayward, has said that global peak oil demand is set to peak between 2020 and 2030. And that will be before supply peaks.
He has changed his tune. Just last summer, Hayward was one of those saying that demand for oil would peak decades into the future.
But not anymore. He now argues that government policies in the developed world are eroding demand at the rate of 1 percent per year. Such is the falling demand that there was an oversupply of refineries, which is prompting oil companies to close and sell facilities.
According to Hayward, world oil demand will peak sometime after 2020 at a maximum of around 110 million barrels per day. “World demand will peak before its supply peaks because there is plenty of oil in the world, there really is. There are some challenges getting it out in some places, mainly to do with geopolitics, but there is plenty of oil in the world.”
Hayward now believes the oil industry will never sell more gasoline in the United States or Europe than it had done during the boom in 2007.
Hayward’s revised prediction comes months after Deutsche Bank forecast it would peak in six years’ time.
Who is going to be proved right and what does it mean for the costly tar sands?
Falling demand would also take prices down.
Lower prices would postpone peak demand.
China’s car sales rose 46.15 percent year-on-year to 13.64 million units.
Does any one think this is about to stop or that they all will run on electric power any time soon? This could very well offset the possible falling demand from other countries.
Electric cars are a fantastic idea except that they generate electricity only from other energy sources so when several cars will be charging at the same time prepare for a blackout in your green neighborhood.
The electrical infrastructure capable of charging electric cars is simply not there yet. When oil companies invest billions to drill 5 miles deep in to the ocean floor you can bet that they think there will be a strong demand for several years.
Most of would rather drink terpentine and piss on a brush fire than trust anything that what’s his name Howard guy or any other oil executive has to offer. Developing nation’s policy is the cause of peak demand. SURE IT IS. They get every subsidy imaginable and even a few others, their embedded in federal governments, they have NO competition, there are ZERO emission caps, what other option does a consumer have.
Rather than peak demand, call it peak disgust – like all things political.
It’s curious how the industry needs $75/barrel to remain profitable. Two weeks ago, as the price dipped below this level, a law was passed giving oil the power to buy the presidency (unlimitted campaign contributions) and exxon crashed a tanker in houston. Today, when it dipped again; the front pages of every newspaper mentioned how the CIA director ‘predicts’ another attack on America. Don’t worry though, he says it won’t be a big one. Just enough to get oil back above $75/barrel.
Thank you humanity. for keeping the price of oil below $75 – that’s all we have to do.
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