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Page added on May 20, 2020

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Peak Oil Isn’t Here But It Could Be In Sight


The huge drop-off in demand for oil because of the coronavirus pandemic has some analysts talking about Peak Oil, something we’ve been talking about in these parts for what seems like forever. It still doesn’t seem likely to happen anytime in the near-term, though because of the slow rise of electric cars, we are getting ever closer.

By one oil consultancy’s estimate, Peak Oil will be here by 2028, or two years sooner than it previously had predicted, according to Reuters. That ceiling would be somewhere north of 100 million barrels per day, just above the rate hit in 2019. And while normally one might dismiss this as a mere educated guess, it’s telling that even oil executives admit that because of the pandemic, everything is on the table.

In April, Ben van Beurden, chief executive of Anglo-Dutch oil major Royal Dutch Shell (RDSa.L), said the company did not expect oil demand to recover in the medium term, saying the industry was living in a “crisis of uncertainty”.

Bernard Looney, chief executive of BP (BP.L), was later quoted in the Financial Times as saying he would not “write off” the possibility the world had reached peak oil.

The story also contains this (dubious?) proposition:

Looking ahead, cuts in capital spending forced upon energy companies as their revenues crumble could tighten supply enough to cause a spike in oil prices, making electric vehicles more attractive just as automakers ramp up production, analysts say.

“We think this will lead to a tipping point, accelerating the switch to electric vehicles in many more countries around 2023-24,” Per Magnus Nysveen, senior partner at Rystad Energy, a consultancy in Oslo, told Reuters.

“We will start to see that this starts to dig into global oil demand in a very significant way,” he said.

I say dubious because if you look at the actual sales numbers for electric vehicles in places that have been pushing them a lot harder than the U.S. has, they remain stubbornly low, even in normal times with higher gas prices. Alternative fuel vehicles, including electric cars, were just five percent of car sales last year in China, according to CNBC, while in Europe electric car sales are four percent of the market, according to Reuters.

Still, those numbers are inching up, and Reuters also reported Tuesday that while internal combustion-engined car sales are projected to fall 23 percent in 2020 during the pandemic worldwide, electric car sales are projected to fall less, by 18 percent.

The outlook for far into the future for electric remains strong:

[Analysts BloombergNEF] forecast electric models would reach 31% of the overall car fleet by 2040 and account for 58% of new passenger car sales by that date, as combustion engine cars gradually decline from their peak in 2017.

Reuters says that about half of crude oil goes toward powering things on the road, which tells you how big of a mountain it is to climb to move beyond oil altogether and also gives a good sense of the proportions involved. Fifty-eight percent of new cars being electric would certainly represent progress, but it’s still just a fraction of the bigger picture.


9 Comments on "Peak Oil Isn’t Here But It Could Be In Sight"

  1. Cloggie on Thu, 21st May 2020 1:36 am 

    Solar enhanced recovery company Glasspoint went bust due to the corona price slump of oil. Glasspoint had a promising technology to recover more oil with solar-generated steam rather than the more expensive steam from natural gas:

  2. DT on Thu, 21st May 2020 7:53 am 

    “Glasspoint had a promising technology” Why is it still not “promising”? Because natural gas usage for steam production can be run 24/7. Solar-generated = intermittent. Promising indeed.

  3. Abraham van Helsing on Thu, 21st May 2020 8:17 am 

    ““Glasspoint had a promising technology” Why is it still not “promising”? Because natural gas usage for steam production can be run 24/7. Solar-generated = intermittent. Promising indeed.”

    Solar isn’t that intermittent in the Californian desert.

    The project was cancelled because demand for oil has collapsed and with it the prices.

  4. DT on Thu, 21st May 2020 8:51 am 

    The California project with the mirror arrays? The one that uses(ed) natural gas to keep the contraption hot over night? You mean this one? “The plant burns natural gas each morning to commence the operation.”

  5. DT on Thu, 21st May 2020 8:53 am 

    “Solar isn’t that intermittent in the Californian desert” Are you kidding? The sun goes away at night no matter where you set up FF extenders such as Photo Voltaic and the like.

  6. printbabyprint on Thu, 21st May 2020 12:36 pm 

    Wait peak oil will happen. I cannot believe it .I thought it won’t happen ever , because we have wind ,solar ,fusion ,cow manure, continue cllogg

  7. Russian meddler in elections (very naughty Russian fellow who slso likes onion rings) on Thu, 21st May 2020 12:53 pm 

    If the glass in the middle of the solar array reaches 2.41Gigawatts you can time travel in a deLorean.
    You can boil water for coffee from the heat.

  8. Richard Guenette on Thu, 21st May 2020 1:59 pm 

    Peak oil already happened, now it’s still declining.

  9. Richard Guenette on Thu, 21st May 2020 2:29 pm 

    We should go back to living with the basics, not gadgets that distract people.

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