The case for a near-term peak in oil demand is “certainly more plausible” than that of peak oil supply, but the widespread acceptance of it reflects a degree of exuberance not warranted by the data, according to Washington, DC-based consultants Energy Policy Research Foundation Inc. (EPRINC).
Many of the forecasts are aspirational rather than predictive, according to EPRINC’s new report “The Pandemic and the End of Oil? The Pandemic, Peak Oil Demand, and the Oil Industry,” describing what needs to happen to achieve climate goals, not what is likely to happen. The report goes on to say that forecasters too often presume transient market events like the pandemic will have permanent effects.
EPRINC believes the capability of electric vehicles is being exaggerated and their shortcomings downplayed and that this is occurring in the context of consumer behavior which generally shows little desire for sustainable practices. The consultants also note that past transitions do not suggest a peak and decline in oil demand is likely.
These circumstances are further complicated by the demonstrated willingness on the part of clean energy supporters to protest new electricity transmission projects, utility-scale solar power farms, and offshore wind turbines with the same fervor they’ve demonstrated in protesting construction of new oil and gas pipelines.
The report also warns of the systemic inertia posed by potentially stranded hydrocarbon-focused assets, the loss of large and sometimes recently invested capital further slowing the transition to alternative energies and the reduction of oil demand. The International Energy Agency’s (IEA) Sustainable Development Scenario projection that oil consumption would drop to 85 million b/d by 2030 and to 65 million b/d by 2040 would imply the loss of $20 billion/year of refinery assets, according to EPRINC’s analysis. IEA also predicts a 33% drop in the North American power sector’s natural gas use, with an attendant potential abandonment of billions of dollars-worth of pipeline assets.
