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Page added on June 22, 2016

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Neither “Peak Oil” Nor “Peak Oil Demand”

“Peak oil demand” has become a fashionable concept among climate campaigners but the evidence suggests oil consumption is growing at the fastest rate for a decade and shows no sign of letting up.

Global oil consumption increased by nearly 1.9 million barrels per day (bpd) in 2015, the largest annual increase since 2004, apart from the post-crisis bounce recorded in 2010.

Most forecasters predict consumption will grow by another 1.5 million bpd in 2016 and a similar amount in 2017, which would make it the strongest sustained period of growth since 2004-2006.

Oil consumption in the advanced industrial economies that are members of the Organisation for Economic Cooperation and Development (OECD) peaked at 50 million bpd as far back as 2005.

Between 2006 and 2014, OECD consumption declined in seven out of nine years.

By 2014, OECD oil consumption had fallen by around 5 million bpd, or 10 percent (“BP Statistical Review of World Energy,” 2016).

In the OECD countries, consumption does indeed seem to have “peaked” thanks to a combination of high and rising oil prices, energy efficiency mandates and prolonged economic weakness.

But in the rest of the world, consumption has continued growing rapidly.

Non-OECD oil use grew by more than 13 million bpd between 2005 and 2014, an average of almost 1.5 million bpd per year.

In 2015, spurred by a combination of economic expansion and much lower fuel prices, even the OECD returned to growth with the first consumption increase since 2005 (again excepting the unusual 2010 post-recession bounce).

Over the entire 2005-2015 period, global consumption increased by more than 10 million bpd, as the growing thirst for oil in emerging markets more than offset lower OECD demand.

With the global economy still expanding and oil prices at the lowest level for 10 years, consumption is set to continue growing strongly for the foreseeable future.

Top Oil Consumers

In 2013, non-OECD countries consumed more oil than the advanced economies for the first time and there is no sign that consumption growth is slowing, let alone peaking, in the non-OECD economies.

OECD countries that have reported steep declines in consumption over the last decade include the United States (-1.4 million bpd), Japan (-1.2 million bpd), Germany (-0.3 million bpd), France (-0.3 million bpd) and Britain (-0.3 million bpd).

But this has been more than offset by rapid growth from non-OECD countries including China (+5.1 million bpd), India (+1.6 million bpd), Saudi Arabia (+1.7 million bpd) and Brazil (+1.0 million bpd).

As a result, 10 of the 20 oil-consuming countries in the world are now outside the OECD.

Non-OECD countries have become central to the outlook for oil consumption over all time horizons from the short term (one to two years) to the very long term (one to two decades).

The rapidly expanding middle class in emerging markets shows a strong aspiration for car ownership and more air travel.

Vehicle registrations in emerging markets such as China and India are growing rapidly, from a low base, which means there is enormous potential for further rises.

Major road-building programmes designed to connect urban centres with fast highways are both responding to and will likely stimulate more car ownership and driving.

Demand for regional as well as long-haul air travel is also increasing rapidly, with passenger-kilometres up by 6.8 percent in Latin America last year and 8.7 percent in the Asia-Pacific region (“Market Developments,” IATA, 2016).

Climate campaigners claim to foresee an inevitable peak in oil consumption within the next 10-20 years that will leave some oil reserves “stranded”.

But they focus too much on developments such as the potential for electric vehicles and greater fuel efficiency that could cut oil demand in the advanced economies.

The future of oil consumption is increasingly tied to the mobility revolution in emerging markets, where the growing demand to travel for work and pleasure shows no sign of abating.

Rigzone



32 Comments on "Neither “Peak Oil” Nor “Peak Oil Demand”"

  1. penury on Wed, 22nd Jun 2016 11:27 am 

    Everything is wonderful, in its own way. There are no problems on the horizon. Nothing is stirring in the darkness. Hurry buy stocks, vote for Hillary, things can only get better as long as the world can increase consumption of fossil fuels. Well, there might be a small problem, but tech will prevail.

  2. Dustin Hoffman on Wed, 22nd Jun 2016 11:38 am 

    Does it surprise anyone the desire to live as a mortal “God”, as the late Randy Udall labeled us modern consumers. He also added it has made USCA “little crazy”.
    Going down the heat ladder will be the tricky part…the way up is easier than the way down.

  3. Plantagenet on Wed, 22nd Jun 2016 11:38 am 

    As long as China and India continue to grow their economies and use more and more fossil fuel, the demand for fossil fuel will grow.

    In 2015 India GDP grew about 7%.

    Cheers!

  4. PracticalMaina on Wed, 22nd Jun 2016 11:47 am 

    Plant, many of those economic hubs are already so over crowded, that there is no way they can feasibly jam anymore suvs into the urban areas if they wanted to, which they do. Also the air quality becomes so bad, it could become a limiting factor in the use of ice vehicles in the citys, as we have seen all over the world recently. Throw in the limiting factor of water in these coal dependent countries, and things are going to be very interesting. There is no way they could become nearly as inefficient fossil fuel users for transportation as we are in NA.

  5. Don Stewart on Wed, 22nd Jun 2016 12:17 pm 

    Following up on a previous exchange with BW Hill. Some back of the envelope calculations.

    From Nick Lane:
    Eukaryotes have access to 200,000 times as much energy per gene as prokaryotes. The extra energy comes from the endosymbiosis with mitochondria. (Page 171 in The Vital Question)

    BW Hill estimates that current oil consumption by humans is ‘on a gross energy bases that is 47,775 BTU per day per person. A person consuming 2500 calories per day is inputting 9.92 BTU.’ Double the BTUs to count all fossil fuels, and we get 100,000 BTUs to 10, or 10,000 times what a eurkaryote gets (we are eukaryotes).

    Multiply 200,000 by 10,000 and we get 2,000,000,000 times the energy per gene that a bacteria gets. The United States would probably be more like 4 billion.

    But we still can’t digest our own food…we outsource that to the bacteria in the gut.

    By the way, the extra energy that eukaryotes get is mostly used to build infrastructure (proteins). One could argue that humans use the extra fossil energy to build more infrastructure and to heat and cool the ambient and also for mobility (doing work, mass times distance).

    Another point that Lane makes is that there is a great black hole between the prokaryotes and the eukaryotes. There are no intermediate species…it is not like an ecosystem with continuous niches. There is no advantage whatsoever for a bacteria to take on any of the characteristics of the larger eukaryotes…energy per gene would not increase at all, while overhead costs would increase.

    Much to ponder. I recommend the book.

    Don Stewart

  6. Apneaman on Wed, 22nd Jun 2016 12:39 pm 

    “Climate campaigners”?

    Who are these secretive people he keeps referring too?

    I remember the old days of bad journalism when they at least provided the names of individuals and organizations they were using for their strawmen arguments.. and quotes too.

    Assume, for the sake of discussion, these “Climate campaigners” refer to every single anti pollution group on the planet going back 30 years. Now look at the growth of fossil fuels in the same time frame. Then ask yourself why do these pro fossil fuel people STILL get all worked up about them? If you were keeping score by the year it would be FF 30, Enviro’s 0, yet the paranoia is not only there, but actually increases every time the industry and economy is shaky. Me thinks the fossil fuel cheerleaders need the enviros for a scapegoat and misdirection. Works both ways don’t ya think? In spite of the fact that the industry has a long criminal history, they are not wholly responsible for AGW and pollution. Oh they guilt as hell (off with their heads?), but it’s not all on them. Big faceless oil serves the same purpose for the “Climate campaigners” as the “Climate campaigners” serve for the Big Oil and their cheerleaders (paid & amateur). It helps keep the story simple for the simple minded.

    It’s been a good 30 year run for fossil fuel, yet they play the sniveling victim more than anyone else (PR dollars). Actually it will be your kids and grand kids who will definitely be the screaming victims and maybe you too – Almost no one (super wealthy) younger than 60 – 70 is getting off.

    Global Warming Fact: More than Half of All Industrial CO2 Pollution Has Been Emitted Since 1988

    http://blog.ucsusa.org/peter-frumhoff/global-warming-fact-co2-emissions-since-1988-764

  7. shortonoil on Wed, 22nd Jun 2016 1:09 pm 

    “Global oil consumption increased by nearly 1.9 million barrels per day (bpd) in 2015, the largest annual increase since 2004, apart from the post-crisis bounce recorded in 2010.”

    It is so easy to sway opinion with a few numbers, especially when the truth gets stretched a bit. We have written software that correlates the whole EIA and World Bank data bases. We will be making parts of it available to anyone at our site in the near future. (As soon as yours truly gets his butt in gear and finishes its conversion to Visual Basic. Having an organization named after you simply means that all the crappy jobs get dumped on you).

    Anyway, according to the EIA C&C production grew by 1.47 mb/d between 2014 and 2015, not 1.9 mb/d. Of course 1.9 mb/d sounds better than 1.47 if you are trying to sell oil stocks. An yes, it was the biggest jump in a decade at 1.91%. Of course the yearly average increase between 1960 and 2005 was 5.46%. Also, inventory build was the highest on record last year, and the EIA includes that into demand (someone bought, it even though it is sitting in a tank along the Gulf Coast).

    The world oil industry increased production by 1.91%, and that was because the price had fallen by 70%, and they were trying to maximize their revenue. The industry also lost $2.3 trillion in the process. All in all, for the extraction side of the industry, it was the worse year on record. But let’s not let a few details get in the way of a good promotion.

    Will production increase this year?? That all depends on how soon the industry goes broke!

    BW Hill
    http://www.thehillsgroup.org/

  8. SugarSeam on Wed, 22nd Jun 2016 1:37 pm 

    I don’t doubt you, but could you link to something that corroborates that the industry lost $2.3T?

  9. Davy on Wed, 22nd Jun 2016 1:49 pm 

    “The world oil industry increased production by 1.91%, and that was because the price had fallen by 70%, and they were trying to maximize their revenue. The industry also lost $2.3 trillion in the process.”

    Maybe I am a hard core doomer blinded by my passion, OK. Yet, when you look at the above numbers Short’s comment paints and you see a bankrupt system.

    The actual situation is much worse than the awful above numbers. The actual situation consists of economic compression and converging deflation manifested in demand and supply destruction.

  10. PracticalMaina on Wed, 22nd Jun 2016 2:02 pm 

    They call it pulling a Rumsfeld.

  11. JN2 on Wed, 22nd Jun 2016 2:10 pm 

    Don Stewart: yes, eukaryotes, mitochondria, ATP – was it just an accident? I’ve ordered the book – this stuff is almost unbelievable!

  12. Davy on Wed, 22nd Jun 2016 2:24 pm 

    JN2, book is on my wish list and I am thinking about ordering it. Alway nice to look at the same old world with a different filter.

  13. yoshua on Wed, 22nd Jun 2016 3:38 pm 

    Someone said that lower oil prices also lead to lower energy costs in dollars for the oil industry and to lower energy costs in dollars for the entire energy sector, which leads to lower over all energy prices.

  14. shortonoil on Wed, 22nd Jun 2016 4:06 pm 

    “I don’t doubt you, but could you link to something that corroborates that the industry lost $2.3T? “

    The world pumped 93 mb/d last year, and replaced almost none of it. Oil sold for about $50/ barrel, and there are 365 days in a year.

    http://www.online-calculator.com/simple-calculator/

    Essentially, it is what it would have cost the industry to have replaced the reserves that they extracted, and didn’t! That is a loss! They are simply converting their assets into a cash flow.

  15. Davy on Wed, 22nd Jun 2016 4:41 pm 

    Short, I wouldn’t call turning assets into cash a loss but I do see booked reserves vanishing because of price declines. I see companies mothballed and investments now nonperforming. The fact companies are not replacing reserves points to a retirement party. I am not an oil guy so I see this scenario slightly different but I do see massive losses from an industry that gyrated between extremes.

  16. yoshua on Wed, 22nd Jun 2016 5:01 pm 

    An energy price deflation by 50 percent followed by lower energy cost for energy produces will of course not help the ratio between revenue to debt, which will turn worse, especially for highly indebted companies.

  17. Truth Has A Liberal Bias on Wed, 22nd Jun 2016 7:01 pm 

    Short was asked a very simple question. His answer should now convince anyone who hasn’t figured it out yet that short is a complete fucking idiot and most of the shit he writes is complete fucking nonsense.

  18. onlooker on Wed, 22nd Jun 2016 7:27 pm 

    Your the idiot Truth. What part of not replacing reserves and thus a bankrupt system do you NOT understand! Basically, it is like somebody who now is not only living on the interests on the deposit but is dipping into the principal originally deposited. Or is that also beyond you to understand. Basically, the Oil Industry is foundering reinforced by a foundering economy in a negatively reinforcing foundering dynamic. Meaning the whole oil/economic system is being pulled down.

  19. antaris on Wed, 22nd Jun 2016 7:29 pm 

    THALB, some of us think Short makes a lot sense. You, not much.

  20. yoshua on Wed, 22nd Jun 2016 8:22 pm 

    Depletion of “our” reserves is of course the worst possible deflation scenario.

  21. onlooker on Wed, 22nd Jun 2016 8:50 pm 

    Oil is the lifeblood of our Economy. Nothing positive economically can come from its depletion

  22. Truth Has A Liberal Bias on Wed, 22nd Jun 2016 10:11 pm 

    Yeah I get it retard. It’s fucking obvious. Short pulls numbers out of his ass. When asked for a reference or a data set he’s got nothing. He’s spouting fucking retarded bullshit just like his joke Etp model.

  23. Truth Has A Liberal Bias on Wed, 22nd Jun 2016 10:22 pm 

    You know you’re in a room full of fucking morons when they all look to short for knowledge. Hey short why don’t you answer a simple fucking question without deflecting it. Flesh out your 2.3 trillion. Show your work. You’re a fucking clown. How many of those Etp model reports did you sell? Futilitist said he got one from you for free and that he empirically proved it. Problem is he doesn’t know what empirically means. Only retards drink your bullshit. Few weeks ago you said your model shows oil should be some price you made up them the price rose higher then you’re out with some more made up bullshit. You’re a fucking mountebank.

    Anybody who wants a good laugh should read Futilitist trying to defend the Etp model.

    http://www.sciforums.com/threads/the-etp-model-has-been-empirically-confirmed.152487/

    What a bunch of fucking clowns.

  24. makati1 on Wed, 22nd Jun 2016 10:52 pm 

    Truth has a mental problem … and is immature. It is interesting that the ‘F’ word is used as a substitute for education in America.

  25. Davy on Thu, 23rd Jun 2016 6:09 am 

    Makati Bill, doing his typical anti-American defaulting. TWLB is Canadian from Montreal.

  26. ghung on Thu, 23rd Jun 2016 9:48 am 

    OPEC oil revenues slump to 10-year low

    “OPEC’s 13 member countries saw oil export revenues slump to their lowest level in a decade last year.

    Crude revenues fell nearly 46% to $518 billion in 2015, according to OPEC’s annual bulletin published Wednesday.

    Collapsing world oil prices also meant that OPEC countries spent more importing goods than they raised from exports for the first time in 17 years.

    The cartel posted a combined current account deficit of just under $100 billion in 2015, compared with a surplus of $238 billion in 2014. …..”

  27. Robert Spoley on Thu, 23rd Jun 2016 10:24 am 

    All reserves deplete eventually. As any economy expands energy requirements increase, regardless of their source. If oil & gas are the cheapest, they will be favored for the energy requirements desired. If reserves are not being replaced, then more expensive energy sources will be used. This will slow economic growth. The net result is that the O&G companies are eating their “seed corn” in order to stay afloat and be the cheapest source for energy. They are being successful in that endeavor. Witness Saudi Arabia. This is just normal supply/demand business. It is the way the entire world works. Please clean up the language. The foul stuff is not required and degrades the argument on either side.

  28. gmai login on Thu, 6th Oct 2016 2:54 am 

    Makati Bill, doing his typical anti-American defaulting. TWLB is Canadian from Montreal.

  29. makati1 on Thu, 6th Oct 2016 3:10 am 

    “America”, gmai, is Canada as well as the US. There is no difference except on a map. The same insanity rules there (Tar Sands) as in the lower 48. The same greed. The same over-consumer society. The same coming doom as they are tied at the hip with the Empire. They have more wild land, maybe, but it is not much use in a world without oil.

    BTW: Are you a Davy clone? Same ignorance and arrogance.

  30. Davy on Thu, 6th Oct 2016 6:40 am 

    Makati, nope gmai is just another sane person commenting on board idiots like you and TWLB that sing about others misfortune while bragging about how wonderful you both think you are. Psychopathic narcissism I think they call it or in your case old age dementia (72) and delusional grandiosity. You really make me sick but these days I just ignore most of your boring redundant anti-Americanism and personal self-promotion. You crave admiration because you are such a failure. If it weren’t for your Filipino boyfriend you would be on the street begging.

  31. marmico on Thu, 6th Oct 2016 7:44 am 

    BP Statistical Review states that “global total proved oil reserves in 2015 fell by 2.4 billion barrels (-0.1%) to 1697.6 billion barrels, just the second annual decline in its data set (along with 1998)”

    http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/oil/oil-reserves.html

    Only an innumerate would worry about a 0.1% decline when the reserve production ratio is ~50 years.

  32. Govind Geek on Wed, 14th Oct 2020 3:27 am 

    Hey,
    Oil is the lifeblood of our Economy.
    https://calculator-app.com/

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