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Why the IEA is Wrong About Peak Oil Demand

Why the IEA is Wrong About Peak Oil Demand thumbnail
  • The IEA predicts peak oil demand in 2028 due to the shift towards cleaner energy technologies.
  • OPEC disagrees, forecasting rising oil demand driven by increasing energy needs in emerging economies.
  • Two key factors often overlooked in oil demand forecasts are the growth of the middle class in emerging economies and the energy demand for artificial intelligence.
AI robot oil demand

It is fairly common nowadays to see relatively near-term estimates for a point at which demand for petroleum-based fuels begins to decline. The term often used to describe this “tipping point” is Peak Oil Demand. When I say “near term,” I mean right around the corner if you look at an estimate published last year by the International Energy Agency-IEA, an intergovernmental agency headquartered in Paris, France, and originally established after the Oil Embargo of 1973 to help cushion against future oil shocks. This agency has expanded its mission to a fairly broad remit over the years since, and it is not the purpose of this article to detail all its endeavors. One role we will highlight is that of the one it plays in gauging and advising member governments on energy security and energy sources for the coming years.

In that capacity, the IEA in a report entitled, Oil 2023, and published last year settled on 2028 as the year past which the use of petroleum fuels will begin to decline.

“Growth in the world’s demand for oil is set to slow almost to a halt in the coming years, with the high prices and security of supply concerns highlighted by the global energy crisis hastening the shift towards cleaner energy technologies, according to a new IEA report released today.”

This view is largely shared, particularly with respect to liquid motor fuels, by other agencies and organizations that produce long range estimates. The U.S. Energy Information Agency-EIA, Rystad, and Det Norske Veritas- DNV, all show this category tailing off rapidly in the 2030s as electric vehicles assume larger shares of passenger vehicles. We will call this the “Bear Case” for liquid fuels.

As you might expect the Organization of Petroleum Exporting Countries-OPEC, disagrees with this view. In fact in their recent report on oil demand outlook, published in Nov 2023, they see oil demand of all kinds, except for electricity generation, rising from ~105 mm BOPD in 2025, to 116 mm BOPD in 2045. This forecast show use of oil as a road fuel continuing to be the largest source of demand increase for this period.

The report notes that “the divergence between the IEA and OPEC outlooks is largely due to assumptions regarding the speed at which internal combustion engine vehicles will be replaced by electric vehicles.”

What is interesting is that it is very difficult, if not impossible, to see a production trend being established that would support the bear case. In the U.S., we are pumping at a rate of over 13.2 mm BOPD and still importing ~6.7 mm BOPD to feed our nearly 22 mm BOPD daily habit. The U.S. Energy Information Agency-EIA forecasts in their monthly Short-Term Energy Outlook-STEO that by the end of 2025, global production and demand fall into a fairly tight balance at 105 mm BOPD. That certainly isn’t a long-term trend, but as is often said, the long-term trend is made up of a bunch of short-term ones. For my part, I would say that the trend line in the STEO graph below matches the OPEC estimate more closely than the other three.

Both of these notions cannot be true. Which is the correct assumption about future oil demand? Or are they both wrong? What are two factors these two disparate views of oil demand are not taking into account?

The first answer lies in how you interpret the growth of the middle class in China, India, and Africa in terms of energy demand and the final form it will take. The second is the advent of energy demand for Artificial Intelligence (AI), an entirely new source of demand that is just now starting to appear in energy demand forecasts. I discussed one possible outcome of this demand for U.S. natural gas in an article in March 2024.

To be clear, I am not arguing that AI demand will directly impact crude oil demand as a primary source. Most analysts are factoring renewables and natural gas to meet AI demand. What will impact demand for WTI and other baskets of crude is the relationship to light oil production in the U.S. and the associated gas that’s produced along with it. We will leave that discussion for a future article and refocus on our basic topic. What could oil demand actually be when accounting for growth in currently underserved but upwardly aspiring lower classes?

Then there is the Bull Case for oil. Arjun Murti, a well-known energy commentator and partner at energy analyst firm Veriten, as well as a former Goldman Sachs energy analyst, discussed future energy demand in a recent podcast on his Super-Spiked blog. In the episode titled, “Everyone is Rich,” Arjun posits what the impact on world energy demand would be if everyone was as energy-rich as the “Lucky,” 1.2 billion people that live in the Western World. More specifically, Arjun asks what it would mean for the other 7 billion people in China, India, Asia, and Africa to have the lifestyle that Americans, Canadians, Europeans, and a few other countries enjoy. The answer he comes up with on an absolute basis, 250 mm BOPD, using a reference point of 10 bbls a year!

Where are we now? The U.S consumes ~22 bbls of oil annually per capita while China consumes 3.7 bbls per capita. Indians use just 1.3 bbls per annum. That’s a pretty wide gap, and as Arjun notes, “economic growth and energy growth are one and the same. You do not get economic growth without adequate energy.”

One of the arguments put forward by the Peak Oil crowd is that efficiency growth Gross Domestic Product (GDP), and energy substitution will bend the curve on oil demand, as noted in the 2030’s, and spell the twilight of fossil fuels. Arjun points out that there is simply no evidence this is happening using data compiled by Goldman Sachs through 2019. Efficiency gains never lower the amount of energy needed to produce an additional dollar of GDP, above 2.7% GDP growth. A point rarely hit in modern times. To close that gap and attain growth you need more energy inputs. Oil.

Looking at Arjun’s graph below, which uses China as an example, we can see with their present demand of 3.7 bbls per capita which equates to about 15 mm BOPD. With 10 bbl per annum added on for growth in the middle class, you get to 35 mm BOPD to meet Chinese energy demand. Even if China attains 100% Electric Vehicle-EV penetration, not something Arjun (or I) believe is possible, you still have 27 mm BOPD of oil demand. According to SP Global China produces about 4.1 mm BOPD, leaving a gap of about 11 mm BOPD they must import to meet present-day demand.

A point that leads me to what Arjun noted as the ultimate demand limiter and why, although countries that will surely desire to increase their oil usage may not be able to do so. Geopolitical limits to imports. Quoting Arjun, “There is no precedent for countries importing 20-30 mm BOPD” to meet their energy needs. The U.S., before the advent of shale production was importing over 10 mm BOPD as recently as 2005. That’s what we know is possible.

It should be noted that India is in a similar fix and for it to meet Arjun’s 10 bbl per capita standard for being rich, they must import 35-45 mm BOPD. We just don’t know if this can be done from both a logistical and sheer capacity of supply basis. As the EIA graph above highlights global oil production has increased only about 3 mm BOPD since 2019. In order for the world’s poor to become richer, a great deal more oil will have to come to market.

Your takeaway

 

The message of the growth of the middle class globally often gets lost in the constant blare of climate change and energy transition noise. The fact remains that the world we live in today and the one likely to exist at mid-century, runs on oil.

The notion that the world can quickly and painlessly transition to other forms of energy has developed some, not holes, but gaping craters in recent times. Offshore wind farms are being canceled as costs mount. Car manufacturers are delaying implementation of EV rollouts due to lack of interest from consumers. Communities impacted by siting of solar farms are pushing back on land use as they propose to gobble up large tracts for this purpose.

Roger Pielke, another well-known energy commentator and author, in a post in his Substack, The Honest Broker, cites a White Paper by Vaclav Smil that discusses our energy transition progress to this point-

“All we have managed to do halfway through the intended grand global energy transition is a small relative decline in the share of fossil fuel in the world’s primary energy consumption—from nearly 86 percent in 1997 to about 82 percent in 2022. But this marginal relative retreat has been accompanied by a massive absolute increase in fossil fuel combustion: in 2022 the world consumed nearly 55 percent more energy locked in fossil carbon than it did in 1997.”

Balanced against this lack of progress in substituting oil for other forms of energy is the fact that the world’s energy supply is in a tight balance with demand at present. If the poor of the world make even modest progress toward Arjun’s 10 bbl per annum prognostication in the coming years, the Bull Case for oil will certainly asset itself.

By David Messler for Oilprice.com 



3,006 Comments on "Why the IEA is Wrong About Peak Oil Demand"

  1. aldie debuit on Thu, 24th Oct 2024 4:55 pm 

    Is earth really invaded by immigrants, or it is us sending the garbage that we hate on earth because earth is an execution chamber.

    We are sending on earth the garbage that we hate. You will all die as I explained above.

  2. aldin djeput on Thu, 24th Oct 2024 5:06 pm 

    they don’t have a real flesh body. What are they. The garbage that we hate and want dead.

    Have you located the doors by which the are coming on earth. Where are the fucking doors.

    You cannot located the doors by which they are invading earth earth because there is none. They are transferred here for execution, same as the population of earth that is here for execution.

    You dare to tell me that I am the only one that has noticed that people have longer necks. Nobody else has noticed that.

  3. alaid alpe on Thu, 24th Oct 2024 6:11 pm 

    Glenn Frey – You Belong To The City

    https://www.youtube.com/watch?v=8TToLgW7zuc

    https://en.wikipedia.org/wiki/You_Belong_to_the_City

    What they really mean, is that you belong to a smart city near you.

  4. Jean lapierre on Thu, 24th Oct 2024 6:19 pm 

    All femininized man with skinny body and no muscle mass. They have been feminizing men for a long time.

    https://www.youtube.com/watch?v=tt4cR9szMS8

  5. jae latupie on Thu, 24th Oct 2024 6:21 pm 

    Again feminized men with no muscle mass.

    https://www.youtube.com/watch?v=9SCzVEUlqqA

  6. jale tremblay on Thu, 24th Oct 2024 6:24 pm 

    again feminized men with long female hair.

    Player – Baby Come Back

    https://www.youtube.com/watch?v=NmEyGiaqm7k

    Feminization of men wen full force during 1980 to 1990

  7. alaind laturd on Thu, 24th Oct 2024 6:26 pm 

    More feminization at 1:00

    https://www.youtube.com/watch?v=fNFzfwLM72c

  8. alaod palier on Thu, 24th Oct 2024 6:30 pm 

    Smart cities can only work if you feminized the masculine men.

  9. alain depuis on Thu, 24th Oct 2024 8:21 pm 

    You have to love this. I was outside smoking a cigarette. One street light appears White, and a another one appears has light orange. I guess very soon I will leave earth for another reality. I hate this fucking planet.

  10. alain depuis on Thu, 24th Oct 2024 8:24 pm 

    One fucking star in the sky is of White color and another one is of red color. That is going to be so much fun this new update vision. You could at least fix the fucking legs. Maybe I don’t need my legs in this new reality.

  11. Larouse Alain on Thu, 24th Oct 2024 8:34 pm 

    Some street lights in front of my house are the same color as Springsteen skin.

    Notice the word teen in his name as pédophiles Springsteen.

    https://www.youtube.com/watch?v=AT9r0ycymvM

    Only a pedophile can write a song like I am on fire.

    https://www.youtube.com/watch?v=lrpXArn3hII

  12. Alain Laplante on Thu, 24th Oct 2024 8:53 pm 

    1:09 represent female ass worshiping as soon in some porn movie. This seems to come directly from a porn movie. Go on porn website and search for female dominatrix ass worshipping.

    https://www.youtube.com/watch?v=itRFjzQICJU

  13. alaind leduc on Thu, 24th Oct 2024 9:00 pm 

    Notice that in almost all Hollywood movies you see men worshipping women sexually not the other way around where you would have women worshipping men sexually. Fucking Jews. They need to be completely exterminated.

    See comment above. Earth will be turned in a like a fire and only the chosen ones will not be burned alive. After all, orange is the color of fire.

  14. joe lapierre on Thu, 24th Oct 2024 9:18 pm 

    One star in the sky, has its color oscillating between white and red. One star is light orange instead of white. The Jews need to be exterminated, everyone of them.

  15. karin mohamed on Thu, 24th Oct 2024 9:21 pm 

    So fucking obvious that it is just an illusion when you look at the stars and see rays of lights going into them. Something is going to happen.

  16. alandi laporte on Thu, 24th Oct 2024 9:25 pm 

    Look at Bill Clinton, he is looking like a dead cadaver.

    https://www.youtube.com/watch?v=a5xfPxgMNik

  17. alan debuc on Thu, 24th Oct 2024 9:33 pm 

    This shit is way too much. Feet worshipping at 0:41. Fucking perverts. This whole clip below is about female worshipping. She is dressed in black meaning authority and power. Typical BDSM porn scenario where a dominatrix is worshiped be a submissive men.

    https://www.youtube.com/watch?v=RYk0_U7kf3g

  18. Era music on Thu, 24th Oct 2024 9:42 pm 

    there were the rock music era followed by the disco music era. The disco music era did not last long, and we moved on to the electronic music.

    Disco era:

    https://www.youtube.com/watch?v=kl1LP81eSKY

    Electronic music era
    look from roxette. Another video music worshipping women.

    https://www.youtube.com/watch?v=LlVI7ZNiFlI

  19. Deniss Tremblay on Thu, 24th Oct 2024 9:45 pm 

    Another feminized man with no muscle mass. From 1980 to 1990 there were a big push to feminize men.

    https://www.youtube.com/watch?v=O_ozTiBy4rQ

  20. joe laplante on Thu, 24th Oct 2024 9:53 pm 

    Walking like a man, hitting like a hammer
    She’s a juvenile scam
    Never was a quitter, tasted like a raindrop
    She’s got the look

    Notice the word Juvenile and man. She walks like a men but she is a young teen girl. Fucking pedophile. Waking like a man meaning she is transexual. Fucking sexual perverts.

    https://www.youtube.com/watch?v=O_ozTiBy4rQ

  21. alain devline on Fri, 25th Oct 2024 2:46 am 

    In the Orion belt, one of the end star is red. Street light are back to their normal white color.

    https://astrobackyard.com/orions-belt/

  22. alla jones on Fri, 25th Oct 2024 6:39 am 

    Trump is a replica of my thoughts. I made a comment about how earth is a garbage can for all the undesirable beings.

    Well Trump just said the same thing but he substitute earth for the US.

    https://www.youtube.com/watch?v=LK9DBOFoNFQ

  23. alain debug on Fri, 25th Oct 2024 6:46 am 

    Earth trees are dying. I see them dying at accelerated speed all around me where I live. Earth is an execution chamber. We are filling up the earth with all the garbage that we hate before earth vegetation die forever. Trump just said the same thing as I said.

    https://www.youtube.com/watch?v=LK9DBOFoNFQ

  24. alain laforge on Fri, 25th Oct 2024 7:20 am 

    All the THUYA OCCIDENTAL or Cèdre du Canada of my neighbors are dying.

    https://afvsm.qc.ca/wp-content/uploads/2021/04/Thuya-occidental.pdf

    Earth trees are dying. I see them dying at accelerated speed all around me where I live. Earth is an execution chamber. We are filling up the earth with all the garbage that we hate before earth vegetation die forever. Trump just said the same thing as I said.

    https://www.youtube.com/watch?v=LK9DBOFoNFQ

    Enough of the BS is enough. It is time to start mass execution of earth population.

  25. lapierre jean on Fri, 25th Oct 2024 7:22 am 

    I told you that I would kill everyone on earth because of Canada firearms laws. I am doing it right now, killing earth population.

  26. Mocking you on Fri, 25th Oct 2024 7:29 am 

    This is us mocking Blinken and the US state department staff. This is us mocking globalism.

    https://www.youtube.com/watch?v=RaiSlknRvZM

  27. alaind laporete on Fri, 25th Oct 2024 8:00 am 

    21:13 on the left. The top of tree is gone because it is dead.

    https://www.youtube.com/watch?v=ynRhOXYbrFc

    I told you that I would kill everyone on earth because of Canada firearms laws. I am doing it right now, killing earth population. You live on a dying planet and you will all die soon.

  28. alaind leduc on Fri, 25th Oct 2024 11:39 am 

    They are afraid that the US will isolate itself from the rest of the world. EU and Israel, UK are afraid that they will cut of all trade with US and expulsion all the EU and Israel ambassador out of US land.

    https://www.youtube.com/watch?v=CcVQTBWGu6o

    When you see something like this ons US Department of State you know something big is about to happen.

    https://www.youtube.com/watch?v=RaiSlknRvZM

  29. alain debug on Fri, 25th Oct 2024 12:20 pm 

    The city of Detroit is sabotaging itself. See for yourself.

    https://www.youtube.com/watch?v=BNKxB4Nn3RY

  30. alain delong on Fri, 25th Oct 2024 3:52 pm 

    This is the US Department of State sabotaging itself from the inside. The message is subtle but it clearly says that they are sabotaging themself from the inside.

    https://www.youtube.com/watch?v=RaiSlknRvZM

    https://www.youtube.com/watch?v=PAQ7m_gNMVY

  31. alain leduc on Fri, 25th Oct 2024 4:01 pm 

    People are not intelligent so I will explain to you what it signification of US Department of State sabotaging itself from the inside.

    This is the mission of US Department of State from the YouTube page:

    Under the leadership of the President and Secretary of State, the U.S. Department of State leads America’s foreign policy through diplomacy, advocacy, and assistance by advancing the interests of the American people, their safety and economic prosperity. On behalf of the American people we promote and demonstrate democratic values and advance a free, peaceful, and prosperous world.

    Basically what it means is that the US Department of State does not believe in democracy and globalism anymore and is ready for a governance by a King or Monarch.

    https://www.youtube.com/watch?v=RaiSlknRvZM

  32. Jin on Sat, 26th Oct 2024 4:06 pm 

    I don’t think it’s a good idea.

    Best,
    drywall and insulation contractors

  33. alain debug on Sun, 27th Oct 2024 4:44 am 

    I don’t know if it is true, but is is funny.

    Why Do Canadians Go Ballistic During War

    https://www.youtube.com/watch?v=0230d9mp5WY

    I told you that we know how to do war.

    https://www.youtube.com/watch?v=U1RCiaPlslg

  34. alid depuis on Sun, 27th Oct 2024 5:02 am 

    19:22 in the video below, dying trees. I told you that I would kill everyone on earth because of Canada firearms laws. I am doing it right now in from your face for the whole to see how much of an murdering asshole I really am.

    https://www.youtube.com/watch?v=ynRhOXYbrFc

  35. alain debug on Sun, 27th Oct 2024 5:08 am 

    i told you that I know how to do war.

    https://www.youtube.com/watch?v=U1RCiaPlslg

    Killing trees is also an act of war, a very violent act of war.

  36. alain laporte on Sun, 27th Oct 2024 5:17 am 

    Make no mistake, killing all the green vegetation of the world is like me declaring war against the whole world. You guys understand that. You understand that I am in war against the whole world and want to kill everyone living on earth, this is why I am killing earth vegetation. You people are not really intelligent, so I have to explain everything to you

  37. aldine alkpie on Sun, 27th Oct 2024 5:21 am 

    2:48 dying trees.

    https://www.youtube.com/watch?v=ocH4M8DJ3dA

    You guy understand that I am dedicated at killing everyone living on earth. You understand that I am at war with the whole world and I want earth for me alone.

  38. alain lapierre on Sun, 27th Oct 2024 5:31 am 

    The trees are almost all dead. You understand the real meaning of me kill all earth vegetation.

    https://www.youtube.com/watch?v=wlInz6qBWlM

  39. alan Tremblay on Sun, 27th Oct 2024 6:05 am 

    1:35 what an ugly bitch.

    https://www.youtube.com/watch?v=zcYO87ai6Sg

    I told you that a new energy field is being installed and only people that have received the right flesh body updates will live. The rest will die, like you see on the video above.

    sometime walking inside my house I hit wall of energy that I cannot go through and I have to walk backward. I does not last long but I can feel the new energy field being deployed.

  40. quitet on Sun, 27th Oct 2024 10:07 am 

    Msnbc and Nbc youtube page are really quiet. No videos for the last 12 hours.

    https://www.youtube.com/@NBCNews/videos

    https://www.youtube.com/@msnbc/videos

  41. alain leduc on Sun, 27th Oct 2024 10:17 am 

    Look at the dying trees.

    https://www.youtube.com/watch?v=1DJz69g8Otg

  42. Jean larousse on Sun, 27th Oct 2024 10:24 am 

    You are not really intelligent, so I have to explain everything to you.

    My point is the whole planet earth reality has been modified and trees are dying all over the world. Almost every videos on YouTube has been updated with dying green vegetation. Something to think about how powerful we really are.

    https://www.youtube.com/watch?v=1DJz69g8Otg

  43. Joe laprusse on Sun, 27th Oct 2024 10:29 am 

    You are not really intelligent, so I have to explain everything to you. You stupid people really understand what is taking place right now.

    the whole earth reality has been modified in such a way that we are currently killing all earth vegetation. Everyone videos on YouTube has been modified and now show dying trees.

    You understand the significance of that, do you.

  44. jaln trmeblay on Sun, 27th Oct 2024 10:36 am 

    Every video on the Web and YouTube show people with longer neck and face moved forward. the whole earth reality has been modified in such a way that we made people neck longer.

    You understand the significance of that, do you and how powerful we really are. People don’t seem to see what is really happening here on earth are this moment. You are so stupid that I thought that I had to explain it to you.

  45. Alain depuis on Sun, 27th Oct 2024 10:52 am 

    I think we are even accelerating the entropic degradation of earth infrastructures by showing more videos with damage street, rusted bridges, damage concrete sidewalks and building walls. I think we are even playing with entropic decay speed and increasing the speed of decay. Steel will rust fast, car will rust fast, plastic will break earlier,

  46. alain dleon on Sun, 27th Oct 2024 11:01 am 

    You guys understand what is really going on. I am killing the whole population of earth because of Canada firearms laws. You understand the gravity of your current situation, do you.

    I feel sometime that people don’t understand the gravity of the current situation. You are not really intelligent, so I thought I would tell you the gravity of your situation.

  47. alan larousse on Sun, 27th Oct 2024 11:18 am 

    Earth is just a simulation with a small number of people with a real souls that are stuck here. Just a simulation. If earth was populated with real people, you would have sent someone to talk with me. Just a simulation.

  48. Jo Laplante on Sun, 27th Oct 2024 11:33 am 

    This is beyond believe and it it giving me PTSD. Nobody will dare to say anything about people neck length. Nobody will dare to say anything about dying trees. It has to be a simulation.

  49. alain delon on Sun, 27th Oct 2024 12:28 pm 

    It is just a simulation. I did the mathematical simulation a diesel engine. Every simulation has rules. The mathematical rules on earth are: calculator of conservation of mass, energy and second law of thermodynamic, chemical model, and the pain, joy and fear models for biological beings.

    The best part of earth are the knowledge inside earth calculators. The rest is not important.

  50. lain delon on Sun, 27th Oct 2024 12:32 pm 

    Hitler understood that some beings are not real and function on a primitive mathematical model: pain, joy, fear, acceptance.

    https://www.youtube.com/watch?v=fMjhl9jxrug

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