Peak Oil? Peak Oil Demand
April 13th, 2015
Via: Bloomberg:
Naimi and other Saudi leaders have worried for years that climate change and high crude prices will boost energy efficiency, encourage renewables, and accelerate a switch to alternative fuels such as natural gas, especially in the emerging markets that they count on for growth. They see how demand for the commodity that’s created the kingdom’s enormous wealth—and is still abundant beneath the desert sands—may be nearing its peak. This isn’t something the petroleum minister discusses in depth in public, given global concern about carbon emissions and efforts to reduce reliance on fossil fuels. But Naimi acknowledges the trend. “Demand will peak way ahead of supply,” he told reporters in Qatar three years ago. If growth in oil consumption flattens out too soon, the transition could be wrenching for Saudi Arabia, which gets almost half its gross domestic product from oil exports.
Last week, in a speech in Riyadh, Naimi said Saudi Arabia would stand “firmly and resolutely” with others who oppose any attempt to marginalize oil consumption. “There are those who are trying to reach international agreements to limit the use of fossil fuel, and that will damage the interests of oil producers in the long-term,” he said.
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The Saudis, to be sure, never thought much of peak oil. That’s the theory that global crude supplies, on an upward trajectory for a century and a half, were about to stop rising and could no longer keep up with demand. A faction of geologists and environmentalists made this argument part of the policy debate in the early years of this century. In 2005, when a book by oil analyst Matthew Simmons predicted a drop-off in Saudi output would signal that global supplies were beginning an irreversible decline, Naimi belittled the claims and promised higher production capacity. He won the argument. The Saudis pump more today than a decade ago. Saudi oil fields boast state-of-the-art technology, and at least two of them, in the middle of the desert, have gourmet restaurants. U.S. output has had a stunning rise as well, to more than 9 million barrels a day at the end of 2014 from less than 6 million five years ago. The peak that has the Saudis more worried is peak demand.
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“The Saudis may be once again trying to prolong the age of oil,” says Bill McKibben, the author and environmental activist who has helped lead the campaign to block the Keystone XL pipeline, which would bring oil from Canada’s tar sands to the U.S. market. “But it feels like the steady, relentless fall in costs for renewables may make this different from other cycles.”
Related:
Fossil Fuels Just Lost the Race Against Renewables
The $5 Billion Race to Build a Better Battery
