BP Says Peak Oil May Have Arrived, But on the Demand Side, Not Supply

By:
Chris Gaetano
Published Date:
Sep 14, 2020
Amid the years of worrying that the world will eventually run out of oil, few had considered the possibility that demand for oil would exhaust first, but a recent report from British Petroleum says this might indeed be what's happening, to the point where the petroleum market might never fully recover, said CNN Business.

One of the effects of the pandemic has been the collapse of oil prices due to the widescale slowdown in economy activity, meaning that people need far less of the stuff than they did before. While prices have recovered somewhat  since the spring (though not without the occasional knock), the sector (like many across the economy) still remains weaker than it was before the pandemic hit.

The BP report explored three different scenarios over the next three decades for oil prices. In one, where oil consumption remains largely the same as it is now, particularly because of unchanging government policies and social preferences, oil prices are expected to plateau around 2025 and begin declining in 2030 due, at least in part, to  increasing efficiency and electrification of road transportation. In scenarios where governments begin aggressively moving on climate change and decarbonization efforts overall, though, demand will never recover from what will turn out to have been its peak in 2019.

In contrast, BP, last year, had expected demand for oil to remain robust until at least 2030.

Not everyone in the oil game is convinced, however: CNN Business noted that the Organization of the Petroleum Exporting Countries (OPEC) believes that while demand for oil will contract more this year than previously predicted, it  will start trending upward sometime next year.

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