It is the never ending story. We have to go back to 1956, when the geophysicist M. King Hubbert formulated his ‘peak oil’ theory. At that time it was calculated that by the year 2000, the world would reach the zenith of this fossil fuel. It has been more than a decade since the International Energy Agency assured that this peak had already been reached in 2006. But they were wrong, because in 2018 world oil production reached a new peak again.
This time is the good one, according to Elon Musk. The Tesla CEO’s prediction comes in response to statements by the CEO of JP Morgan, where he ensures that oil and gas will continue to be necessary for 50 years. In Musk’s opinion, it is true that there will be a long use of these fossil fuels, but that the peak of oil will be reached much sooner.
And this is where he launches his prediction. The oil peak (‘oil peak’, in English) will come within the next five years. In other words, the maximum demand for oil is close and from then on the whole trend will be downward.
Peak oil demand probably happens within the next 5 years
— Elon Musk (@elonmusk) January 19, 2023
The International Energy Agency thinks so too. Musk is not alone in this idea. The IEA has also predicted that peak oil will be reached in the middle of this decade at the latest. In the words of Fatih Birol, President of the IEA: “Even with the current political configuration (Ukrainian war), the world of energy is changing dramatically before our eyes.”
There are several possible paths, according to the Agency. A first conservative scenario where countries and governments do not fully comply with their environmental objectives. The second option is that most of the objectives are met, with a commitment to renewable energy and a notable increase in electric cars. Finally, there is a third scenario, much less realistic even for the IEA, which assumes that carbon neutrality will be achieved by 2050.
The idea is that in all three scenarios, significant oil reduction is taken for granted. Of course, elements that could distort this image such as a war or some global event such as the pandemic are not introduced.
There are too many failed predictions. The last big company is to ensure that we had already reached the peak was BP. With the pandemic, world production fell to 88.14 million barrels per day and it was thought that even if it rose, it would not reach the peak of 102.22 million barrels per day of the 2018 peak.
This prediction of the big oil company can still be correct, since for the moment they have not reached that level again. However, the situation for 2023 may be very extreme.
I expect World oil production to reach maximum 101 mmb/d in March 2023.
1 mmb/d less than 2018 peak of 102 mmb/d.
It should then decline to 98 mmb/d by early 2025.#Awaiting #oilandgas #WTI #CrudeOil #fintwit #OPEC #Commodities pic.twitter.com/lWZS8559yI— Art Berman (@aeberman12) September 8, 2022
Except for countries like the United States, Russia or Saudi Arabia, the rest of the world has been leaving its peak oil behind for years. However, the main producers still have reserves to draw on.
2023, the last rush of oil?. New oil reserves are found from time to time, but the general theory is that the amount of oil available is getting smaller and smaller. This year that is now beginning may represent a turning point.
With China’s exit from the pandemic, the world is preparing to return again to levels of demand equivalent to those before the coronavirus. And that means once again needing as much oil as before. It is true that renewables have grown, but the IEA’s predictions for this year are that new demand records will be set.
The amount. They are 101.7 million brent barrels per day. It is a very high figure, although slightly below the 2018 oil peak. It only takes some unforeseen condition for us to reach it. As we can see, it is quite probable that these years we will continue with very high levels of demand for oil, but it also seems unlikely that it will increase much more in the next decade. Hopefully Musk is right this time.
Imagen | John Beaufort
