Midjourney generated image of a rusting oil barrel in a field, a wind turbine towering over it
Peak oil demand is the point at which the consumption of oil reaches its maximum level before it starts to decline. The timing of peak oil demand is a topic of ongoing debate among firms, analysts, and experts in the energy industry, but major firms and analysts are trending to this decade.
For example, the International Energy Agency (IEA) has predicted that oil demand could peak as early as the mid-2020s. BP’s Energy Outlook has projected that oil demand could peak in the early 2030s. Equinor, a Norwegian multinational energy company, in its Energy Perspectives has projected that oil demand will peak before 2030, and the use of electric cars will play a significant role in reducing oil consumption, however, road transportation will remain a key user of oil-based products. McKinsey, the global consulting firm which deals extensively with the fossil fuel industry, projects late this decade for peak oil demand, and that it could occur earlier.
On the other hand, there are also firms and analysts who believe that peak oil demand is still a ways off. For example, ExxonMobil has stated that it expects oil demand to continue to grow through at least 2040, while the US Energy Information Administration (EIA) has projected that oil demand will not peak until the 2040s.
It is important to note that one of the biggest consumers of energy is the oil, gas, and coal industry, so as other sectors decline in demand, reduction of demand will actually be higher. The best estimate I have of the fossil fuel industry’s energy demand is 11% of global energy, so as oil demand drops by 1 million barrels a day outside of the industry, the actual demand drop will be more like 1.1 million barrels.
Personally, I find the earlier estimates much more credible given the incredibly rapid decarbonization of transportation in major markets like China, which already purchases 60% of the worlds’ electric vehicles, has a domestic manufacturer, BYD, which is outselling Tesla, has built 40,000 km of high-speed electrified rail including linking in neighboring countries Vietnam and Laos through its Belt & Road Initiative, has 500,000 electric buses in its densely…
