In the 1980s, I spent weeks at a time covering Opec meetings in fancy hotels in Geneva and Vienna at which ministers — including the then-famed Zaki Yamani of Saudi Arabia and the immediate post-revolutionary Iranians — debated how to share out the burden of cutting production to accommodate falling oil demand. It was hard, and Opec almost disintegrated more than once. But there was one given in the equation that made it all work: Oil use would start growing again at some point. The fall in oil demand that resulted from the huge price hikes of the 1970s would only be temporary.
Now, with the climate crisis, that given is no more. World oil demand doesn’t have much growth left. Another 2%-3% maybe, spread over three to four years. Or maybe less, with “peak demand” arriving as soon as next year. While that doesn’t mean oil use is about to disappear, it does mean the amount of oil humanity is using will soon start falling rather than rising — permanently. For Opec and for oil companies, that’s a devastating change in the way the world works. But for the climate and for human and other species’ survival, it’s great news. It’s even better because coal and natural gas use are about to go into reverse too, thanks to the rapid spread of renewable energy with battery backup. Together, it means carbon emissions should also start declining this year or next.
So why aren’t climate activists cheering loudly?
Peak oil demand may not be getting much press, but the data-keepers know it’s coming. The world’s foremost energy statistics and forecasting entity, the International Energy Agency (IEA), expects peak demand for all three fossil fuels and for CO2 emissions to arrive before 2030. In its latest review of prospects for the industry, Oil 2024, the IEA sees room for only an incremental 3.2 million barrels per day before demand hits its forever annual average high of just over 100 million b/d.
With the exception of Opec, other energy forecasters mostly agree about peak oil and coal. There’s less consensus on natural gas, but even those who’re bullish on gas predict peak CO2 emissions soon. Some, myself included, see these forecasts as conservative, with peak oil demand in China likely this year or next and the rest of the world close behind. BP, the Western oil company best known for its global energy forecasting, just this week gave 2025 as the likely year for peak oil demand.
In contrast, Opec gamely insists there will be more growth for longer in oil consumption. But its position lost credibility in January, when Saudi Aramco, the state oil company of Opec’s leading member, jettisoned plans to expand its own production capacity. The Saudis have already cut production by roughly 25% as part of Opec’s price-support efforts, and rather than spend a lot of money on still more capacity they won’t use, they want to spend more on diversifying their economy away from oil. It isn’t working very well, but at least they’re trying.
Most of the growth in oil production this decade has been in the US, up by around 6 million b/d to over 13 million b/d. The reason global oil demand is about to fall is, in a word, China. In recent years, China has accounted for as much as half of all global oil demand growth, and that growth is faltering. In fact, in both April and May, it stopped altogether: China used less oil in those months than it did a year earlier. At a time when the West is on an anti-China binge, driven by politicians left, right, and center, perhaps this is why the reactions have been so muted.
Reasons for China’s slowdown aren’t hard to find. Instead of growing its economy at 7% or more per year and making many of the world’s most energy-intensive products and structures, China is struggling with an intractable crisis in a housing sector that once gobbled up fossil fuel-intensive steel and concrete. Its energy-intensive manufacturing sector has stalled amid a trade war with the US and others. And it is registering huge growth in electric vehicle (EV) sales — not just cars, but also vans and large buses and trucks.
Transportation accounts for almost half of oil use in China, as it does worldwide. The electrification of road transport is what will pull oil demand into retreat. Gasoline use has already largely leveled off in Europe and the US, but it isn’t dropping quickly given low adoption of EVs and the shift to ever-larger gasoline vehicles in the US. China is what matters at this stage in the energy transition.
Beijing will also likely lead coal demand into reverse. While China has continued building coal-fired power plants, the lightning pace of its solar construction ensures much of that coal capacity will see little if any use. Yale Environment360 summed the situation up recently: “In 2022, China installed roughly as much solar photovoltaic capacity as the rest of the world combined, then went on in 2023 to double new solar installations, increase new wind capacity by 66%, and almost quadruple additions of energy storage.” Beijing has nominated electric vehicles (EVs), batteries, and solar generation as its “New Trio” of strategic growth industries. If Washington continues to not only block solar imports to the US itself but also push other countries into doing likewise, China won’t stop developing these strategic industries. It will sell more solar, even cheaper, at home and to countries that remain open to this climate bonanza.
The IEA reckons that the most likely result of flattening oil demand in the face of capacity growth will be a collapse in oil prices. The agency now forecasts a “staggering” 8 million b/d overhang of excess oil production capacity by 2030. Opec, with help from Russia and a few others, is already holding nearly 6 million b/d of oil off the market in a so-far impressively successful effort to stabilize oil markets. However, they expect to eventually gradually start using that capacity again as demand grows.
If that doesn’t happen, if oil demand instead levels off or starts to fall within the next year or two, as now seems likely, Saudi Arabia’s and other Opec members’ tolerance for producing less than they’re capable of could run out. It’s happened before. When Opec starts pushing more oil onto the market than buyers want, prices collapse.
https://medium.com/the-new-climate/peak-oil-demand-is-coming-soon-087e4ce01988
Comment: This is quite a change from the talk some years ago about peak oil. Even here, at one time, we argued whether the world would run out of accessible oil and gas or whether peak oil was just a myth. There’s plenty of argument whether peak oil demand will happen in the next year or two or sometime in the 2050s or beyond.
So what does this mean for the world and the incoming Trump administration? Sarah Miller offers an answer of what this may mean for the world in the rest of her Medium article, but doesn’t address what this may mean to Trump’s vow to create a new world energy order. Will his drive to produce far more American oil and gas drive prices lower? Will he coerce refineries to retool and use exclusively US oil? Is that what US producers want? Or does he intend to supplant traditional world energy suppliers like the Gulf countries and Russia? There’s talk on both sides of the Atlantic that US oil and gas can displace other suppliers of energy to Europe, including Russia.
None of this frightens me. I don’t see it as crazy talk. I do believe world energy markets will temper and shape his eventual decisions. I’d actually be pleased if he succeeds in this endeavor. Am I worried about the environment? Sure, but I don’t see a slowdown in the adoption of renewable energy, including nuclear power. All that continues to get cheaper and more efficient. What say you?
TTG
The bottom line is that PV and wind are cheaper than coal, and will soon be cheaper than gas for electricity generation. Regarding transportation, the overall lifecycle cost of an EV is already cheaper than that of an ICE; soon the upfront purchase price will be lower as well.
The people who run the power generation companies are completely agnostic about where the electricity comes from, and the second it makes economic sense to switch, they will do so.
I think peak oil is a real thing and it is being obfuscated by oil industry spinmeisters into something they like to call “peak oil demand”. If oil starts to run short then oil prices will go up and people will use less oil because now oil is more expensive than its competitors. Does that mean that demand for oil has peaked or that the supply of oil has peaked? The way to figure that out is to look at the price of oil – if the price has gone up then supply-is-driving-demand but if the price has gone down then demand-is-driving-supply.
Here is a chart from 1985 to present:
https://upload.wikimedia.org/wikipedia/commons/thumb/3/35/Brent_vs_WTI_crude_oil.webp/1920px-Brent_vs_WTI_crude_oil.webp.png
Current prices are near the all time high and the trend line is upwards. Demand is leveling out because supply is leveling out. Just wait and see what happens when supply starts to fall.
“The electrification of road transport is what will pull oil demand into retreat”
LOL of course it will. At what cost, and where?
“BP … just this week gave 2025 as the likely year for peak oil demand.”
I was not aware BP was a forecasting company.
” In light road transport, there are around 2.1 billion electric cars
and vans by 2050 in Net Zero, making up over 80% of the global car parc.”
Tesla is going to be worth one hell of a lot of money according to BP. Of course you dear readers read that report, and the part about increased battery demand and “The demand for critical minerals increases substantially as the energy system transitions”. Like Nickel. Much of it from, drum roll, Russia? No wonder they want to bust up the Russian Federation. It’s not like they can access all those minerals in Afghanistan. Remember that discussion on SST?
TTG,
“Will he coerce refineries to retool and use exclusively US oil?”
No. He’ll tell the EPA to approve any permit needed to build pipelines and refineries. Did you miss the case about the Chevron Doctrine? Lots of the regulatory apparatus is going to collapse as it is unconstitutional. The main reason for decline in oil demand in the near term is due to that thing called ‘recession’. The European, especially German, economy is in deep decline. Ours as well, though it will recover sooner and faster.
Fred,
China seems hell bent on freeing themselves from the yoke of imported oil and gas. They’re electrifying their transportation system as fast as they can.
We get our nickel primarily from Canada. Indonesian reserves dwarf Russia’s.
Removing regulatory hurdles will help, but that won’t make building or retooling expensive new refineries any more palatable to the oil companies. The European economy is just barely out of recession, but ours has been pretty damned good since the Covid-induced collapse of Trump’s last year. China’s bid to wean itself off of energy imports is leading the decline in oil demand.
TTG,
Thanks for the narrative Covid lockdown orders leaving out Cuomo, Whitmer, Newsome, Houchol, et.al; ’cause Trump. Our economy has significant inflation due to QE which the FED hasn’t completely cured because of Janet Yellen’s actions at Treasury. We’ll be facing commodity price inflation most of 2025. That will further drive a recession. Not that you would know given the fraudulent stats put out by BLS under the Biden-Harris administration.
China is a communist country utilizing slave labor to produce a great deal of this ‘electrification. They may cut imports of oil, they are not doing so with coal. Did you fail to read the BP report and the wokey woke Decarbonization crap? Oh, and Climate Change is real, except for the impact of all those coal fired electric plants in China. The economics are just as great too.
“Removing regulatory hurdles will help, but that won’t make building or retooling expensive new refineries any more palatable to the oil companies.”
Do you not have any idea of the financial cost of regulatory compliance with building anything, especially and industrial plant? Remove the regulation, remove the cost, and that ‘expensive’ plant becomes far less so. You also get a stable future income stream to enable financing it too.
Both coal and oil use for power generation in China are falling rapidly.
https://www.carbonbrief.org/analysis-chinas-clean-energy-pushes-coal-to-record-low-53-share-of-power-in-may-2024/
“Clean energy generated a record-high 44% of China’s electricity in May 2024, pushing coal’s share down to a record low of 53%, despite continued growth in demand.”
carbonbrief do not understand the Chinese numbers or misrepresent them.
It’s not that green energy is 44% of all of China’s energy production in May, 2024. It’s that compared to May,2023 we see an increase of 44% on a y/y basis in green energy.
Coal rules in China. We also see the classic problem with green energy that the production capacity is underutilized . So there maybe 780 GW installed solar production capacity but if it runs only at forexample a 60% production capacity. Solar will only generate 468 GW per year. The same goes with wind there is also a huge difference between production capacity and actual production numbers.
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/013124-coal-still-accounted-for-nearly-60-of-chinas-electricity-supply-in-2023-cec
“The average utilization hour for China’s solar PV plants in2023was 1,286, down 54 hours year on year.
“Utilization hour” is the metric used by China to measure the utilization rate of generation units. It reflected the average full-capacity operating hours in a year for each type of generation unit. In comparison, the utilization hour for coal-fired units was 4,685 in 2023, up 92 hours year on year.”
Coal is still King:
https://oilprice.com/Energy/Coal/Coals-Share-of-Electricity-Generation-in-China-Dips-Despite-High-Demand.html
Coal’s share of power production is down
“China’s share of coal power generation in the total mix stood at 58.7% over the first ten months of the year, Reuters’ Gavin Maguire reported this week. This is down from 61.6% for the same period of 2023 and 61.8% for the first ten months of 2022.”
But the amount power produced by coal hit all-time high.
“This may seem like a small but significant victory for the wind and solar industries of the country, and the global transition push as a whole. However, this is in percentage terms. In absolute terms, China’s coal power generation hit an all-time high this year, rising to 4,838 TWh from 4,724 TWh from January to October last year.”
You were right about the water
Oil imports down 7% y/y in aug. 2024. N.gas imports up 9% y/y. Coal imports are up 3% y/y and national coal production is up 2.8%.
Yes a lot of the new energy productions comes from non-fossil sources but has there been a drop in fossil fuel use?
https://www.stats.gov.cn/english/PressRelease/202409/t20240924_1956648.html
https://www.carbonbrief.org/analysis-chinas-clean-energy-pushes-coal-to-record-low-53-share-of-power-in-may-2024/
Fred –
Ukraine has lots of Lithium, Titanium, Gallium, Beryllium and many other rare earth minerals. Which is why Putin wants to take over the country.
leith –
I thought it was for the hot chicks.
leith, you were saying before that Russia was motivated by a desire to crush freedom (Ukraine’s porn industry). Now it’s their elements.
Drifter – And their oil and gas also. I know, I know, yes Putin has gazillions of untapped oil & gas in his own country. But much of that is in the high north and it’s a lot easier to drill for in Ukraine’s sunny south. Plus if left alone, Ukraine could undercut his prices.
James – It’s not just ‘hot chicks’, Putin’s guys have also been raping boys and babushkas in the occupied areas.
Fred, you need to ween yourself off Trump talking points, as the world weens itself oil and gas.
My bet is you’ll forever be looking for a gas station as you drive in a worn out gas guzzler by countless EV charges in the real near future
Al,
My chauffeur keeps the tank full.
Leith,
So not the grains grown in ” The Good Earth”? I’m sure that saviors of humanity who gave us the Paris Climate Accords knew nothing about those rare earth minerals when the “supported democracy (!)” in Ukraine. Has President for life Zelensky sold of the mining right yet? He’s sold off everything else.
I’m sure donOld will be an interested buyer.
https://www.weforum.org/stories/2024/07/the-future-of-critical-raw-materials-how-ukraine-plays-a-strategic-role-in-global-supply-chains/
Seems they have Nickel also, as much or more than Putin.
Leith,
The World Economic Forum says so? My my. I’m sure China will love cutting a deal with those guys so they can import it from Europe rather than Indonesia or, surprise, one belt, one road initiative New Caledonia.
If you need nickel, go talk to Indonesia, Australia, or Brazil. Not Russia.
https://www.nasdaq.com/articles/top-9-countries-nickel-reserves-updated-2024
…or Ukraine.
Big thoughts here. If you believe Miller, then short Exxon stock and use your winnings to support the cause of your choice. If you aren’t willing to short Exxon stock, then you are an unbeliever or a coward. Or a good guy.
Or broke…
🙂
I recomment the Super-spiked blog for a realist view of the world’s energy needs.
https://arjunmurti.substack.com/p/obliterating-peak-oil-demand-fears
There’s just no way demand for oil, gas and coal is going to peak any time soon as in the next 50 years.
quote
“The divergence in expected 2028-2030 oil demand between the International Energy Agency’s (IEA) recently published Oil 2023 report and its May 2021 Net Zero by 2050 report is staggering. A mere two years ago, the IEA laid out a scenario where oil demand had peaked in 2019 at 100 million b/d and would decline to around 75 mn b/d in 2030. It now projects a remarkable 105 mn b/d of oil demand in 2028. For a sector as large and important as the oil industry, these numbers are not close. Perhaps most notably, we are seeing rising global oil demand at a time of rocky GDP in the three largest oil consuming areas of China, Western Europe, and the United States. As we look at the massive energy needs of the other 7 billion people on Earth that are using just 3 barrels per capita today versus the 13-14 barrels per capita used by the lucky 1 billion of us that live in the United States, Western Europe, Canada, Japan, Australia, and New Zealand, we believe oil demand is likely to continue to grow for the foreseeable future.
In our view, it’s not about being for or against oil or any other energy source for that matter. It’s not a close call: the energy needs of the Rest of the World are massive. We will need all forms of energy supply and technologies, in particular many of the newer options like electric vehicles, heat pumps, solar, wind, geothermal, and nuclear, to scale quickly at a low cost in order to help meet the needs. But the idea that we can meet those needs only from the new stuff is pure fantasy. It is not based on reality. We come to these conclusions as analysts, not advocates. “
I haven’t seen anyone bring up the demand for things made with oil, specifically plastics but the list is very long since it’s everything from Kamala and Trump yard signage to this new global youth craze of drone warfare.
Unfortunately this new fad is not like the break dancing parachute pants, single polyester white Michael Jackson glove, boom boxes and cassette tapes of the 80’s. This one does enormous damage and nobody knows when it will end.
When it does though look out. The demand for things made with oil will rise. Peak oil or no peak. Doesn’t matter.
True, demand for oil will rise as poor countries join the rich in the good life.
But what really struck me as strange is that BP ignores not just the energy needs of the developing world but also new energy hogs in the rich world like AI.
Flat energy use makes no sense.
https://www.scientificamerican.com/article/the-ai-boom-could-use-a-shocking-amount-of-electricity/
Vaguely related, a Trump supporter & …
Financier Is Quietly Trying to Buy Nord Stream 2 Gas Pipeline
Stephen P. Lynch, who prefers to stay under the radar, says a deal for the Russian pipeline would serve long-term U.S. interests
WSJ via archive
https://archive.is/tyuv7
So he’s buying out the Germans? How appropriate.
Leveraged buyout? In case you & your chauffeur want to join the Swiss Bankruptcy proceedings. Mark January 25, 2025, in your calendar, Fred.
Switzerland already surfaced prominently in Trump’s Nord Stream 2 sanctions. It was almost finished then.
Ukrainian News from Toronto:
https://tinyurl.com/Swiss-Allseas-withdraws
The Swiss company Allseas, which has been laying the pipes of Nord Stream 2, has withdrawn its ships from the construction zone in the Baltic Sea.
… Several hours after the announcement, US President Donald Trump signed the National Defense Authorization Act for 2020, which includes sanctions against companies involved in the construction of Gazprom’s Nord Stream 2 and Turkish Stream. Companies that come under the sanctions will have all of their assets in the US frozen, be banned from operating in the US, and be banned from sending any extraterritorial company representatives to the US.
Russia &/or Russians at least won’t have a chance to place their bets due to the US of A’s long extraterritorial legal arm preparing the ground. But, if I may, could one still use Russian assets in the leveraged action without the owner’s consent? Or could Putin do Trump the favor and expropriate the owners who deposited their money outside Russian borders? The beauty of power, eternally creating winners and losers.
https://tinyurl.com/Beautiful-Power
US Embassy Switzerland on legal matters, we warned them:
https://ch.usembassy.gov/u-s-government-announces-russia-related-sanctions-designations/
LeaNder,
“in Trump’s Nord Stream 2 sanctions” Martin Luther! Sorry, didn’t want to take the Lord’s name in vain. Thatnks for the link to the December 2019, yes 2019, article.
“…assets in the US frozen, be banned from operating in the US, and be banned from sending any extraterritorial company representatives to the US.”
Poor executives of the Swiss Company, did you catch that part, “Swiss”, didn’t have assets in, let’s check “Switzerland”? They didn’t have any other subsidiaries either? My, WTF have they been doing for the past 4 years? Maybe they should have not listened to all those Europeans on how to do work in Europe.
BTW ‘leverage buyout’ is your projection and not a statement of mine. Enjoy your TDS.
Fred, TDS? Hardly. Anti-American???* Trump wasn’t the first to object to the pipeline, after all. We would need PL as judge.
Economic activities in the next two decades will drive 17-51% of species to extinction.
By 2029-2031 global warming will be 2 degrees C.
By 2039 global warming will reach 2.25 degrees C.
By 2045 global warming will reach 2.5-3 degrees C.
That will do the trick.
Tidewater –
Any opinions on the detention of ‘Yi Peng 3’ by the Danish Navy after that subBaltic cable between Finland and Germany was cut last week? Some are claiming that at the time the cable was cut that Chinese ship was being controlled by a Russian pilot.
Tidewater,
Evolution drove how many species to extinction? Also, spontaneous creation of new species. How many of those?
BTW Newsweek was wrong about the Ice Age and Al Gore was made rich by his movie. The inconvenient truth is that if you just pay me a modest fee you too can a climate indulgence, just like Bill Gates and all the other private jet owners out there. Modest fee. For you a Green New Deal Friday discount, renewable of course.
Some corral reefs are growing, Also, that big island of plastic in the ocean, scientists are stumped because a large ecosystem is growing in it. It’s a real headache for them. Remove the plastic or destroy their home?
I want it gone but my point is there are real examples with real evidence (no projections) that climate activists selectively and consistently choose to ignore because they have to otherwise it kinda messes up grant money. I know this is happening because my relative is an esteemed biologist working for Gates. This person told me if they don’t give them what they want bye bye grant money.