Our interest was piqued earlier today by a story in Reuters earlier today that management consultancy Arthur D. Little had put out a report on peaking oil demand (free registration required for the full text).
The 7-page report argues the consensus that fossil fuel demand will recover could be misplaced, because of three policy drivers which, it argues, could converge to see oil’s dominance of the energy landscape fade much quicker than first thought. They are:
- price volatility
- security of supply
- climate change
It points to several quite recent events – the IEA’s 2008 World Energy Outlook, where it reduced its 2030 demand forecast by 10m b/d; Congress’ insistence on green undertakings as part of the auto industry bail-out; the European Commission’s proposed Energy Security and Solidarity Action Plan; and China’s pursuit of offshore resources.
The China example may require a little more explaining given the country’s recently accelerated dash to wrap up hydrocarbon supplies around the globe. This has been widely interpreted as highlighting the country’s long-term dependency on oil. But the report argues that in fact it “can be more accurately interpreted as part of a coherent policy to mitigate such risks in the medium-term before moving beyond them in the long term”.