Why Might Oil Demand Peak in 2029?

Speculating on oil is what OPEC does best, and in a surprise statement the intergovernmental organisation is forecasting that in just over a decade, oil demand will peak. The estimate is largely based on the upcoming Paris climate agreement targets, which could see oil demand reach its apex by 2029.  

“In particular, possible climate policies following COP21 have the potential to reduce energy consumption levels and alter the energy mix substantially,” read OPEC’s World Oil Outlook report.

OPEC offers its two cents

The cartel isn’t the first to warn that global oil demand could soon reach its peak, though the fact that the prediction is coming from the illustrious 14-member organisation gives it more credibility than usual. Environmental groups, independent analysts and oil giants alike have all suggested that demand could peak sooner than expected, though this is the first time that the concept has caused concern on a widespread level.

Plan A vs Plan B

While eco-groups embraced the forecast as proof that OPEC is resigning an oil free future, it’s important to note that the prediction is simply a Plan B. Ideally, the organisation expects countries to slowly adopt new emissions regulations, which could see demand continue to grow until 2040. Based on current oil prices, Plan A would mean global demand jumping in 2017 as countries take advantage of the slump. In turn, this will curb investments in alternative energy infrastructure and ensure that the planet continues to guzzle oil right up until 2040. In order to meet the world’s unquenchable thirst for oil, OPEC outlines the need for US$10 trillion in investments over the next 24 years.

“It is vital that the industry ensures that a lack of investments today does not lead to a shortage of supply in the future,” reads the report.

OPEC hit with criticism from economists

OPEC’s World Oil Outlook was not well-received by all, with economists criticising the organisation for shaking an already unstable market. Though despite negativity, OPEC Secretary-General Mohammed Barkindo didn’t mince his words when warning that failure to come to a production cut agreement will have “negative consequences to the already fragile state of the industry.”

Barkindo admitted that he sounded like a “prophet of doom,” but stressed that an embargo is critical to delaying a demand peak for as long as possible.

While demand will indefinitely peak at some point, this hasn’t stopped companies like VUV Analytics from developing innovative solutions for the oil industry. ‘Novel Detector Dramatically Simplifies PIONA Analysis’ explores the importance of measuring the bulk composition of hydrocarbon groups and individual compounds in gasoline, and how a new analysis engine called VUV Analyze has allowed the company to introduce application specific solutions based upon the VGA-100, the world’s first vacuum ultraviolet (VUV) absorption GC detector.