(TND) — Demand for oil is expected to peak a decade from now as lackluster electric vehicle sales and rising global incomes keep interest in fossil fuels high for the time being, according to a new report from Goldman Sachs analysts.
The analysts forecast oil usage to increase through 2034, hitting 110 million barrels a day.
If EV adoption is slower than the base forecast, oil demand could keep increasing towards 113 million barrels a day by 2040, according to the report.
“We think peak demand is another decade away, and more importantly, after the decade it takes to peak, it plateaus, rather than sharply declines, for another few years,” Goldman Sachs researchers Nikhil Bhandari and Amber Cai said in the report.
World oil consumption is currently about 100 million barrels per day, according to the U.S. Energy Information Administration.
“I think this year it’s going to be closer to 103,” Ed Hirs, an energy economist at the University of Houston, said Monday.
The U.S. is the world’s top oil producer and consumer of oil. We account for about a fifth of the world oil market.
America produces about 22 million barrels a day and consumes about 20 million barrels a day. Those figures include crude oil, all other petroleum liquids, and biofuels.
We’re pumping about 13 million barrels of crude oil a day, more than ever before.
Hirs said EV adoption and increased mileage requirements in the U.S. and Europe have probably led Western nations to have already peaked in oil demand.
“That’s fine for the developed world. But now we’ve got an additional 3 billion people that are projected to join us over the next 30 years. And they won’t all get a Ford F-150, but they sure as hell want iPhones and internet and health care. And so, I’m not totally certain that they’re not going to turn to crude oil, because it’s got a tremendous energy density, and it’s easy to transport,” Hirs said. “So, that’s the big caveat, tremendous population growth and a significant amount of energy poverty right now across the globe.”
Any increases in demand over the next decade or so should be driven by developing countries, specifically in Africa and Southeast Asia, Hirs said.
The Goldman Sachs analysts said gasoline demand is likely to peak around 2028, but petrochemical demand growth could more than offset the gasoline demand decline through 2040.
Petrochemicals are used in many consumer products, including plastics, soaps and drugs.
Hirs said oil will absolutely still be used for transportation. And it’s going to be used for electricity generation.
If there’s no carbon price imposed on the fuel, then oil is going to become less expensive relative to solar and nuclear, he said.
“I think it’s going to be difficult to wean people away from a cheap fuel resource,” Hirs said.
And he expects demand for oil in developing nations will more than offset the lessening consumption in the Western nations.
“Even if it does plateau rather slowly, if they are accurate, this tells us we’re not going to meet the Paris targets at all,” he said. “That’s the terrible conclusion we can draw from this.”
The Paris Agreement was an international treaty on climate change adopted in 2015, intended to limit global warming and reduce greenhouse gas emissions.
To reach the treaty’s goal, greenhouse gas emissions must peak before 2025 at the latest and decline 43% by 2030.
Hirs said it’s clear that the Goldman Sachs researchers don’t have a lot of confidence that we’re going to really make any progress in terms of reducing emissions from oil.
“And that’s an indication that, for policymakers, that they really need to get to work,” he said.
Source: wgxa.tv
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