The electric car revolution and stricter global rules on emissions have focused debate in the energy sector on when decades of growth in oil demand will eventually peak. But Spencer Dale, chief economist at energy major BP and former Bank of England policymaker, has challenged the industry to come up with a better question. In a co-authored report with Bassam Fattouh at the Oxford Institute for Energy Studies, which reignited discussion in the oil industry this week, they argue the sector’s fixation about the timing of peak demand is “misguided”. Rather, they argue that the wider ramifications of any peak are really what the industry needs to grapple with. For example, how big oil producer countries reconfigure their economies and energy policies to cope with a n industry in structural decline, even if oil consumption remains robust for years to come. And, what this might means for oil prices. Forecasts for when a peak occurs span a 25-year period, with those estimating an earlier timeframe basing predictions on the rapid adoption of electric cars and harsher environment regulations. BP’s base case has oil consumption growing until 2040, while rival Royal Dutch Shell said a peak could arrive in the next 15 years.
FT 18th Jan 2018 read more »