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Why Even Saudi Aramco Is Now Talking About ‘Peak Oil’

Why Even Saudi Aramco Is Now Talking About ‘Peak Oil’ thumbnail

The world is turning its back on oil. But how quickly? Technological advances in renewable energy and electric cars, accelerated by the threat of climate change, could mean the world’s thirst for petroleum tops out sooner than companies such as Exxon Mobil Corp. or Saudi Arabia’s Aramco are banking on. “Peak oil” once signified the concern that supplies would someday run dry; today it means something very different.

1. Why is oil’s future in doubt?

About 60% of oil is used in transportation, which is also where the biggest technical developments are occurring. The rapid rise of electric carmakers such as Tesla Inc. and China’s BYD could be turbocharged by advances in related fields such as self-driving vehicles and ride-hailing apps, which make it possible for people to switch from owning cars to relying on rides from more efficient fleets. The culmination of these trends could transform how people travel and prompt more revisions to forecasts for when oil consumption will peak. Even Aramco, which used to downplay the prospect of peak oil demand, cited it as a risk factor in the prospectus for its 2019 initial public offering.

2. Is the world running out of oil?

No. The peak oil that’s talked about today is quite different from the concept that emerged in the 1950s, when M. King Hubbert, a Royal Dutch Shell Plc geologist, predicted that U.S. oil production would crest in the 1970s and the world would physically run out of oil. That hasn’t happened, and new discoveries and efficiency gains at existing fields mean oil supplies will abound for a long time to come. So the discussion has shifted to peak demand — whether people will simply use less petroleum, and reserves that are considered valuable today will wind up being left in the ground.

3. What do experts say about that?

Forecasts for long-term oil demand have been coming down. The International Energy Agency, which advises countries on policies, now expects that consumption will hit a plateau around 2030 amid the use of more efficient car engines and electric vehicles. Renewable energy is taking off, electric companies are switching to cleaner-burning natural gas, and the cost of solar power has fallen 50% in a decade. That’s upending the business model of utilities, which were designed to deliver fossil-fuel energy from large power plants to homes and businesses.

Oil Demand Plateau

The IEA anticipates a marked slowdown in consumption growth after 2025

Source: International Energy Agency’s 2019 World Energy Outlook

4. Does it matter when oil peaks?

Yes. To limit global warming to “well below” 2 degrees Celsius (3.6 degrees Fahrenheit) — the target set by the United Nations-sponsored Paris climate change treaty — the IEA predicts that demand for oil would need to peak in the next few years and then decline sharply. That’s unlikely to happen: The agency’s main demand scenario still sees oil use expanding until the end of the next decade.

5. So when will demand for oil peak?

There’s a range of about 20 years between the earliest and latest predictions. The most aggressive ones are based on the rapid expansion of electric vehicles, energy efficiency improvements and policy changes to curb greenhouse gas emissions. That scenario led Equinor ASA and some forecasters to predict oil demand could peak as soon as the late 2020s. Ben van Beurden, Shell’s chief executive, said in 2017 that if electric cars become really popular, the zenith could arrive in the next 15 years. And legendary oil trader Andy Hall affirmed in November 2019 that the peak could come as soon as 2030.

6. Do all oil companies have the same view?

No. Many see a peak around 2040. Others, including Exxon Mobil and Aramco, say their industry will enjoy decades of growth as it feeds the energy needs of the world’s expanding middle class. But state-owned Saudi Aramco, citing external research from IHS Markit, also acknowledged the possibility of a peak within the next two decades in the prospectus for its IPO, which was expected to be the largest in history. OPEC, the cartel dominated by Middle East producers, projects that consumption will continue to increase for at least another two decades. And when the need for oil does peak, it’s likely to plateau rather than fall steeply.

7. Why such differences in forecasting?

There’s a lively debate about how rapidly electric vehicles will catch on. Falling costs for batteries could make them as affordable as internal combustion engine cars over the next 10 years, according to Bloomberg New Energy Finance. Meanwhile, some of the world’s largest auto markets plan to phase out vehicles powered by fossil fuels to clean up dirty air. In 2017, India pledged that all new car sales there would be electric only by 2030, but has since lowered the target to 30%. China is aiming for 60% electric sales by 2035. France and the U.K. will ban the sale of diesel- and gasoline-fueled cars by 2040. The impact of the U.S. is a wild card because President Donald Trump is disrupting efforts to tackle global warming.

8. What will become of oil companies?

Many are speeding up efforts to diversify, investing more in natural gas and cleaner technologies such as hydrogen fuel cells. These companies also do huge business in non-energy uses of crude, turning it into chemicals used for everything from plastics to fertilizer. Still, peak oil has to be a concern, since it can take a decade or more for multibillion-dollar oil exploration projects to come to fruition. Oil companies risk losing $2.3 trillion in wasted investment if oil demand drops sooner than expected, according to a 2017 report from Carbon Tracker. That’s a problem also sometimes called stranded assets.

9. What will happen to car companies?

They are furiously preparing for the shift. All of the new models launched by Volvo in 2019 were offered in electrified versions, while Volkswagen wants 25% of its sales to be electric by 2025. Daimler and BMW are aiming for 15% to 25% by 2025.

10. What happens to countries that depend on oil revenue?

That’s a big unknown. Peak oil could cause political turmoil in so-called petro-states that rely on oil revenue to keep government finances afloat. Saudi Arabia is partially privatizing Aramco to help fund the diversification of its economy for the post-hydrocarbon age. Other petro-states, such as Russia, Venezuela and Nigeria, have yet to lay out their plans for a future after peak oil.

bloomberg



35 Comments on "Why Even Saudi Aramco Is Now Talking About ‘Peak Oil’"

  1. BurnThemAll on Sun, 17th Nov 2019 10:16 am 

    No one considers the plain and simple truth of peak oil. That in order to avoid it, you must increase your production every single year. This is simply impossible. There is also a compounding effect, you need more oil, putting more strain, creating more environmental damage, more resource drain to get oil, and new fields constantly coming up.

    Unfortunately we now discover far less per year that what we consume and it has been that way for decades. Peak oil demand? Give me a break. Oil demand will keep going up until it peaks.

  2. print baby print on Sun, 17th Nov 2019 10:33 am 

    Even demand peak, but supply will never peak hahahhhahahhah. Humans are real idiotic species

  3. Obviously on Sun, 17th Nov 2019 12:53 pm 

    It’s almost like these stories are a way of managing expectations as we slide down the energy descent curve. Obviously EVs aren’t going to be a long-term solution to anything, just a way for some to continue driving until the roads become decrepit and the grid ceases to be reliable.

  4. Another Lunatic Davy Sock on Sun, 17th Nov 2019 2:12 pm 

    Obliviously

  5. JuanP lying on Sun, 17th Nov 2019 2:17 pm 

    more stupidity from the board troll:

    “Another Lunatic Davy Sock said Obliviously”

    One thing is obvious juanpee is a stupid high school drop out that only manages intellectually to be little more than troll. He is not even good at trolling.
    His Woke jerkoff muzzie bullshit is a joke. Yet, the dumbfuck thinks he is the smartest person on this forum! What a joke.

  6. Davy on Sun, 17th Nov 2019 2:23 pm 

    Oops, sorry y’all. I was projecting again.

    Obliviously

  7. Anonymouse on Sun, 17th Nov 2019 3:41 pm 

    The idea that EVs and ‘efficient’ oil burning engines are going to be primary cause of ‘peak demand’ aka peak oil, is laughable. ‘Efficient’ oil burning engines were entirely possible and doable, 50+ years ago. But they were not terribly profitable to our masters, and our economic system loves the in-efficient and wasteful, even if no one really wants to state it in those terms.

    Still, ‘efficient’ engines and EVs causing ‘peak demand’ is a nice way to evade the obvious point that the world simply cant handle, or power 100s of millions of more oil-burning trash-cans, even if they are greenwashed with an electric battery instead of 8 cyclinders.

    You;d have to be a REAL DUMBASS, or write for jewberg to believe the horseshit above. The ‘sauds’ have no choice but to accept peak oil, because their own internal numbers tell them that the sauds best oil days, are behind them, and it has nothing do with EVs or ‘efficient’ anything.

  8. Davy on Sun, 17th Nov 2019 4:04 pm 

    STFU annoymouse. You do not have the right to attempt a normal comment. You are are emotional kid with a stalking and trolling problem. Your comments are as stupid as your buddy stupid. Dumbass Canadian waste case.

  9. Davy on Sun, 17th Nov 2019 4:28 pm 

    Dear Friends:

    Please read my quote at the bottom for a random example of my civil commentary. Please note my polite, moderate, and balanced approach.

    ~~Even if a comment is not directed at me, I attack using a familiar litany of playground taunts, insults, and all forms personally demeaning speech.

    ~~I accuse posters of being a “foreigner”, and I tell them to get out of my country.

    ~~I address people with condescending names.

    ~~I make statements without evidence.

    ~~I always work “hate” into my comments.

    ~~O always moderate and neuter stupid Democrats and lying liberals.

    “STFU annoymouse. You do not have the right to attempt a normal comment. You are are emotional kid with a stalking and trolling problem. Your comments are as stupid as your buddy stupid. Dumbass Canadian waste case.”

  10. Harquebus on Sun, 17th Nov 2019 4:33 pm 

    When the credit cards stop working, everything stops and the consequences of peak oil which, have been masked over for last decade by the biggest debt bubble in history, will be exposed, to their shock and horror, for all to see.
    Should be a good show.

  11. JuanP on Sun, 17th Nov 2019 4:36 pm 

    Dear amigos:

    Please read my quote at the bottom for a random example of my civil commentary. Please note my polite, moderate, and balanced approach.

    ~~Even if a comment is not directed at me, I attack using a familiar litany of playground taunts, insults, and all forms personally demeaning speech.

    ~~I accuse posters of being a “foreigner”, and I tell them to get out of my country.

    ~~I address people with condescending names.

    ~~I make statements without evidence.

    ~~I always work “hate” into my comments.

    ~~O always moderate and neuter stupid Democrats and lying liberals.

    Look at my trolling behavior. Are you guys proud of me? I am proud of myself:
    The most hilarious part is who does DavyClown think he’s influencing- nobody. Nobody pays attention to his extremist garbage. Thus, the reason NOBODY desires to engage in a conversation with the Clown.

  12. makati1 on Sun, 17th Nov 2019 4:42 pm 

    Anon, EVs are a temporary fad for the techies to dream about. They are still selling hundreds of thousands of gas guzzling SUVs, motor homes, big pickups, etc. As you said, profit over practicality.

    How about shutting down/limiting air travel? No more private jets. The US military is the world’s biggest oil users. Not even needed if the US/MIC stopped its attempts to remain an empire.

    ‘For profit’ capitalism is killing the planet and us. A few hundred old billionaires trying to get more and more until the whole game blows up. They don’t care about the future. They will all be dead in a few more years.

  13. Not Davy on Sun, 17th Nov 2019 4:51 pm 

    Davy said STFU annoymouse. You do not have the right to attempt a normal comment. You are are emotional kid with a stalking and trolling problem. Your comments are as stupid as your buddy stupid. Dumbass Canadian waste case…..

    I would never say stuff so childish. I’m a adult.

  14. Anonymouse on Sun, 17th Nov 2019 6:22 pm 

    Speaking of REAL DUMB-ASSES, here comes one now. The resident REAL DUMBASS actually, the exceptionalturd himself. What’s the matter dumbass? Havent been out see the goat yet today? That why you’re even more cranky than usual?

    Probably…

  15. full woke supremacist muzzies jerk maximum newspeak I know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeeeeeeeeeeeeeeed giveaway on Sun, 17th Nov 2019 6:28 pm 

    supertard anon pls be respectful to supertard

  16. Davy on Sun, 17th Nov 2019 6:28 pm 

    LOL, the pissed off sniveling Canadian kid is back for some more neutering. Didn’t you get enough stupid??

  17. Davy on Sun, 17th Nov 2019 6:29 pm 

    LMFAO stupid is up too. JuanPee, get some rest dumbass. You have been up for days.

    This is stupid (juanPee)
    full woke supremacist muzzies jerk maximum newspeak I know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeeeeeeeeeeeeeeed giveaway on Sun, 17th Nov 2019 6:28 pm

    supertard anon pls be respectful to supertard

  18. Anonymouse on Sun, 17th Nov 2019 6:30 pm 

    Bring more sock puppets next time prick-face. Your full-dumbass sock inst nearly enough to tip the scale.

  19. Davy on Sun, 17th Nov 2019 6:32 pm 

    I can’t believe this annoymouse is really upset tonight. I love it. This is really great.

    Sniveling idiot you need to quit commenting it only proves how bad you have been triggered.

  20. Anonymouse on Sun, 17th Nov 2019 6:34 pm 

    RoFLmAo!

    Riiiiight…..

  21. Davy on Sun, 17th Nov 2019 6:35 pm 

    Maybe the makato will surface soon too with some whining then we will have a full grouping of the dumbass gang, makato, juanPee, and annoymouse. These guys are experts on trolling, stalking, and ID theft. Wow what a group.

  22. Davy on Sun, 17th Nov 2019 6:36 pm 

    “Anonymouse on Sun, 17th Nov 2019 6:34 pm RoFLmAo!Riiiiight…..”

    IT IS GETTING EVEN BETTER AND BETTER!!!!

    THE KID IS LOSING IT!!!

  23. makati1 on Sun, 17th Nov 2019 7:04 pm 

    No need for us, Davy, your are a one man dumbass band. Your constant bullshit about how the US is doing so great (without one grain of proof) and transferring YOUR personality onto us. Is your middle name Hypocrite, Davy?

    Wait for it!…..I know the word “triggered” is coming!….Be patient!

    So predictable! Woof! LMAO!

  24. Nostradamus on Sun, 17th Nov 2019 7:05 pm 

    Conventional oil production already peaked. In 2005. The price of oil gradually rose after 2005 until it reached $150 a barrel in 2008. There was a serious economic crisis. Oil companies found a way to extract shale (tight) oil and collapse was averted. Eventually shale oil production will also peak and there will be another economic crisis. Technology might not save the day next time.

  25. full woke supremacist muzzies jerk maximum newspeak I know some wrong when a pretty little white girl ran to a black man arms dead giveaway deeeeeeeeeeeeeeeeeeeeeed giveaway on Sun, 17th Nov 2019 7:23 pm 

    i miss supertard boat and supertard rock
    i’m sorry if i offended them. i pay jizya if they come back.

  26. Davy on Sun, 17th Nov 2019 7:41 pm 

    Sorry y’all. I can’t help myself. And I doubt the best shrinks in the hole world can help me any more eather.

    I’ve lost my formerly dumbass mind. Now i’m Just a lunatic.

  27. Sissyfuss on Mon, 18th Nov 2019 8:23 am 

    I agree, Nostrad. We are living off of expanding debt that is unsustainable. The faithful are losing their belief in shale as a moneymaker but the Fed is keeping them alive in some backdoor arrangement in conjunction with the money printing. Trumps allure, as feeble as it is, is contained in keeping the deplorables believing in the coming rapture of returning white supremacy by any means necessary. But the once and always a conman is no longer a novelty and has to prove his stable geniusity with results that are not forthcoming. His warmed over Ronnie Teleprompter isn’t working because he reads at a 4th grade level. And his destruction of all things Obama is a short lived stunt that accelerates destruction of our life giving natural system. It is up to the youth of the world to reverse the suicidal path humanity is on. Good luck.

  28. asg70 on Mon, 18th Nov 2019 2:10 pm 

    peak…oil…DEMAND!!!!!!!

  29. Nostradamus on Mon, 18th Nov 2019 7:30 pm 

    peak… oil…
    PRODUCTION !!!!!!!

  30. shortonoil on Tue, 19th Nov 2019 9:54 am 

    The Saudi are losing money on every barrel that they produce, so does Iran. Exxon made $3.42 last year per barrel. The world is burning oil 9 times faster than it is finding it. Is the world at Peak? Next dumb question?

  31. Richard Guenette on Thu, 21st Nov 2019 11:17 am 

    Climate change will bring more extreme weather events to all countries-Saudi Arabia too.

  32. Richard Guenette on Thu, 21st Nov 2019 12:40 pm 

    Nature (a complex series of events) will heal the Earth long after we are gone.

  33. Richard on Fri, 22nd Nov 2019 10:52 am 

    I don’t think it matters that much now, this was said in 2014. And it didn’t happen.

    People should be more concerned about the changing economy, than the energy crisis, and I thought the crisis was more important, but that was before a robot drink server arm at a bar in Nevada was installed in the past year.

  34. Outcast_Searcher on Fri, 29th Nov 2019 12:57 pm 

    shorty:

    As usual, you’re wrong, and you’re an idiot.

    In the real world, Saudi Aramco is the most profitable company in the world.

    But let’s pretend like MANY $billions in profit is “losses on every barrel” because shorty’s usual FUD is so accurate. LOL

    https://www.cnn.com/2019/08/12/investing/saudi-aramco-earnings/index.html

  35. Yalla on Wed, 4th Dec 2019 6:52 pm 

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