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Page added on December 25, 2020

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The beginning of the end of the oil era?

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Was 2019 the year when oil demand peaked? This existential question still dominates the energy debate and reflects the unprecedented changes our society experienced in 2020. Only time will tell. But this new reality is possible, not only because of the devastating impacts of the pandemic but also due to major technological changes in transport, driven by the urgency to fight climate change.

Because of lockdowns and travel restrictions, global oil demand dropped by 29 millions barrels per day in April, the worst fall in the history of the oil markets. 2020 was also the year when something very odd, and again unprecedented, happened. US oil prices dropped below zero for the first time in history due to oversupply and limited storage capacity. Even if oil prices have partly recovered since then, the IEA expects overall demand to decrease by 8.8 mb/d (million barrels per day) in 2020.

The prospect of depressed oil prices linked to peak oil demand is likely to lead to the undoing of the OPEC+ cartel and will benefit oil importing countries and regions like the EU. In the middle of this unstable period, the new BP energy outlook surprised energy analysts by actually suggesting that oil demand will never be as high as in 2019. Quite a shocking reality check, coming from an oil major.

This shows the new paradigm we are living in. Yes, 2020 might just be the year that consecrated the beginning of the end of the oil era. The impacts of the 2020 pandemic, especially the economic crisis, will be felt for years. People’s behaviours are likely to change, with a likely reduction in business travel in favour of remote meetings and a partial shift to working from home.

A major shift towards an oil free economy has started in the EU, driven by environmental, health and climate considerations. While oil demand was dropping, new commitments to phase-out the sales of ICE vehicles emerged and a surge in the sales of electric cars started. T&E now expects electric cars to treble their market share in the EU this year as a result of the EU CO2 standards. The EU also adopted a hydrogen strategy which could displace demand for oil in shipping and aviation, paving the way for a long-term energy shift.

What this means for future EU decisions is clear. The EU needs to step up its efforts towards zero-emission cars, trucks, ships and planes as part of the many proposals expected in 2021. And while oil’s dominant role in transport declines, it shouldn’t be replaced by the wrong alternatives. A majority of oil majors have now adopted climate goals and promise to invest in clean sources of energy. But we simply cannot trust them to do the right thing. The example of Total and its push for palm biofuels shows how cautious we need to be.

We will continue to fight against bad alternatives like crop biofuels, biogas and fossil gas, while ensuring renewable electricity is rewarded as the cleanest and most efficient fuel. Hydrogen-based solutions should be used where electrification is not possible, especially in aviation and shipping.

Whether peak oil has already taken place or not, the cracks in the foundations of our oil-dominated society are real. The deep changes that transport experienced in 2020 are unlikely to disappear tomorrow. It is now time for the EU to step up its efforts and bring us closer to the end of the oil era.

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3 Comments on "The beginning of the end of the oil era?"

  1. DT on Sat, 26th Dec 2020 1:11 pm 

    “Hydrogen-based solutions should be used where electrification is not possible, especially in aviation and shipping.” LOL what a joke. Ain’t gonna happen. Not at scale replacing aviation and trucking.

  2. Theedrich on Mon, 28th Dec 2020 12:37 am 

    A demented puppet on the presidential commode will henceforth do everything his stringpullers in the Council of Foreign Relations and Davos direct him to.  Which means enriching them and initiating a new Great Depression.  It’s called “Build Back Better,” the cover slogan for using COVID lockdowns to achieve world conquest for them.

    The DC Swamp and its bribe-ocrats have based their power grab on the lowest-IQ part of the U.S. population, the Negroids and ThirdWorld importees, plus obscure election tricks and impenetrable computer software.  Not to mention preceding the critical event by hiring thousands of violent looters and rioters to destroy Democrat-run cities and put the populace into a state of perpetual anxiety.

    The usurpers will now open the floodgates to turn America into Mexico North, another narco-state controlled by Biden-friendly traitors.  In comparison, Red China will seem the world’s most orderly, prosperous and rational country on earth.  Ordinary American Whites will be intimidated into submission by the media and by the new comissars of the Democrat Mafia imperium.  The twisted idiots savants of cyberland will make sure that the new state of affairs will appear to be all sweetness and light, as in North Korea.  Republican RINOs will acquiesce in the Leftist missionary work, since they will be rewarded handsomely for their treason.

    And, since megalomanic elites always need total power, they will expand and initiate wars to show the world how liberating their ideology is.  Just like Franklin D. Roosevelt in the old days.

    Yup.  A Novus Ordo Sæclorum, just like it says on the dollar bill.

  3. FamousDrScanlon on Mon, 28th Dec 2020 12:30 pm 

    Theedrich, so once again you’re admitting that your tribe has lost because excuse excuse excuse. The stupid get out competed. That’s how it goes for all lifeforms.

    Y’all failed to adapt to an ever changing world. Conservatism is the opposite of adapting & stood no chance in global techno culture that is in a permanent state of flux. Nothing changes culture faster than technology.

    So you’re 🙁

    So you & your tribe are losers. We know. Known for years.

    You’re telling us this why?

    I can send you a box of Kleenex to wipe your tears if you like.

    The more you or anyone dwells on their unmet expectations the worse you’ll feel.

    I doubt the likes of you & clog will ever move on since your self imposed martyrdom is one of the cornerstones of your identity.

    Boo Fucking Hoo!

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