Recently, both IEA and EIA published 20-year forecasts of oil demand. Neither sees a supply constraint in that period. IEA projects growth of 2%/year to 115 million bo/d in 2020, while EIA sees 2.1%/year to 117.4. The two are essentially identical and both are wrong.
Here's why. Both forecasts assume a uniform worldwide growth in both oil demand and economic development for the next 2 decades. That just won't happen. Prior to 1973, oil demand essentially doubled every 10 years, growing at 7%/year for 50 years, shrugging off a gut-wrenching worldwide depression and World War II. Since then, growth has been an anemic, and volatile, 0.4 to 1.0%/year, far short of 2%.
It may be tempting to exclude the politically motivated supply constraints and the artificially elevated real oil prices of the 1973 to 1985 era, and to also pretend they will not recur in the next 20 years. Since 1985, growth rate has averaged 1.4 to 1.6%/year, still significantly less than 2%, and less in real volume by about 11 million bo/d in 2020.
So lets get real with oil-demand forecasts. Recognize that cheap oil ended in 1973, and recognize that future growth in demand will be impacted by political events, economic crises, and environmental scares (such as global warming), and that these events are both as unpredictable in timing but as certain of occurrence in the future as they have been in the past. My 20-year forecast is 1%/year growth in oil use, and that is probably optimistic, because I am an optimist at heart.
Arlie M. Skov
Santa Barbara, Calif.
