Is peak demand concept going mainstream?
The IEA is set to revise its long-term oil demand forecasts – for 2030 – downwards again this year, according to the Wall Street Journal. Citing a person ‘familiar’ with the forecast, the WSJ story doesn’t give an number, but hints at two reasons: first quoting the source as referring to “demand-management policies” having a bigger than expected effect, and the drop in industrial production is apparently also a “big factor”.
The idea that oil demand might peak in the foreseeable future has been gaining ground this year — and not just because the recession is making it a dud year for oil demand growth. An Arthur D. Little report we wrote about in February floated the idea that energy security, environmental concerns and price volatility would have a far more powerful effect on long-term demand than is broadly thought. China’s plans for its energy future figured particularly strongly in this paper.
Cambridge Energy Research Associates chief Daniel Yergin, long sceptical of peak supply concerns, also maintains that global demand could peak in the next two decades.
Then Deutsche Bank analysts last month wrote a big report predicting oil demand would peak in 2016. Their key arguments for this were increased auto efficiency and a shift to hybrid and electric cars; increased instability of investment and supply as the world’s remaining oil supplies are increasingly concentrated in Opec countries, and the further rise of natural gas.
The IEA already substantially reduced its long-term forecast last year, and JBC Energy, always handy with a chart, points out that the IEA already lowered demand outlook substantially in between 2006 and 2008. JBC’s own estimates are quite a bit lower; they forecast that the world won’t see demand levels reaching 100m barrels per day any time soon. But interestingly, JBC raised their long-term forecast slightly this year. JBC’s growth forecast from 2009 appears slightly higher as demand fell several percentage points this year: