for Peak Demand
BP believes evolving policy, technological advances and COVID-19 mean peak oil demand will be reached in the 2020s—or has already happened.
Ride-hailing’s popularity has prompted some consumers to delay or avoid buying their own personal vehicle. The rapid growth in ride-sharing, along with the potential of AVs, may have a profound effect on fuel consumption.
Many of the same uncertainties that persist in the oil market will remain true for copper and lithium, both of which will see major demand growth as a result of the transition to autonomous vehicles.
If oil demand were to peak, the industry would likely see a good bit of consolidation, but the situation would not bring about a collapse.
Although the world is still in the midst of a seemingly perpetual glut, does a supply gap loom? Is peak oil demand imminent? Why is OPEC praising shale and meeting with hedge funds?
A combination of an extended period of low prices, consumers buying larger vehicles, and strong economic growth has caused demand to soar since it reached its nadir in 2012.
The International Energy Agency warns that the age of fossil fuels is far from over. Governments around the world need to step up their policy efforts to find alternatives in the transportation sector in order to keep demand in check.
Third quarter earnings figures for the oil majors reveal a mixed picture for the industry: Companies are dealing with more debt, weaker refining margins, and deeper spending cuts, but they are also experiencing increased optimism that the worst might be over.
Although shifts are taking place with EVs, autonomy, and more stringent fuel economy, it is not inevitable that we’ll shortly be in a post-oil world and that demand will peak sooner rather than later.
An extended period of upstream investment cuts and the fact that petroleum products still fuel more than 90 percent of the transportation sector could mean we’re headed for another price spike. But slower economic growth and structural shifts on the demand side could keep another bull market from occurring.