EDINBURGH/HOUSTON/SINGAPORE, 16 October 2017: The market is no stranger to peak oil. But industry focus is shifting from concerns about peak oil supply to a more concrete threat– peak demand. The Rise and Fall of Black Gold, released today by Wood Mackenzie, is a comprehensive, cross-commodity, cross-value chain analysis of peak demand. The report identifies the drivers as well as the potential impact of this global transformation – across regions, sectors, and fuels.
Wood Mackenzie argues that the market faces a number of fundamental structural changes: the story is not one of a simple peak and decline.
Transport fuel demand, for example, highlights the challenges facing the oil market. Of the 96 million barrels per day (b/d) consumed worldwide, almost 60 million b/d of that demand comes from the transport sector.
Technological advances, both in fuel efficiency and in hybrid and electric vehicles, will erode demand for transport fuels. But that erosion will not be felt uniformly across the world. The rise of electric vehicles and renewable energy explains some of the widening divide between developed and emerging economies.
Demand across the OECD will revert to structural decline by 2020, wiping out about 4 million b/d of demand by 2035. Throughout the decade from 2020, a combination of factors, including electric vehicle take-up, as well as government policies and a mature transport sector, will lead to declines in OECD transport oil demand.
In contrast, Wood Mackenzie expects demand in non-OECD economies to grow by nearly 16 million b/d by 2035, due in part to rising income levels and a growing middle class boosting demand for transport fuel. On top of this, demand for consumer goods, including plastics, and the need to move freight in an increasingly consumer-driven world, will also contribute to non-OECD oil demand. Non-OECD demand growth slows from 2030, driven by a stall in oil demand growth in China.