On September 14 (Monday), British Petroleum (BP) issued a report stating that the era of continued growth in oil demand is over, becoming the first major oil company to make such an announcement. Many people believe that the continued growth in oil demand will continue for 10 years or even longer.
BP says the era of growing oil demand is over
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BP said in its latest report on September 14 that oil consumption may never return to the level before the outbreak of the epidemic crisis. Even the company’s most optimistic forecast sees oil demand doing little better than “roughly flat” over the next 20 years as the energy transition shifts the world away from fossil fuels.
Everyone from the bosses of energy giants to OPEC ministers to oil industry veterans insist that oil consumption will continue to grow for decades. They say time and time again that oil is the only commodity that can satisfy the needs of a growing global population and middle class.
But BP describes a different future. In the company’s view, oil’s supremacy will be challenged and eventually evaporated. That’s why BP has taken the boldest move yet among its peers to align its operations with the goals of the Paris climate agreement. The company’s CEO, Bernard Looney, said in August that he would cut oil and gas production by 40% over the next 10 years and invest up to $5 billion a year to build one of the world’s largest renewable energy companies.
That’s because he suspects oil use may have peaked due to the pandemic, stricter government policies and changes in consumer behavior. BP’s energy outlook shows oil consumption falling by 50% by 2050 in one scenario and nearly 80% in another. Under a “business as usual” scenario, oil demand would recover but remain at 100 million barrels per day for the next 20 years.
In fact, BP is not the only major oil company to adjust its operations to adapt to the energy transition. Royal Dutch Shell, Total and other companies in Europe have announced similar plans to shift to clean energy operations as consumers, governments and investors increasingly call for change.
Three possible scenarios for oil demand
BP’s report considers three possible scenarios The scenarios, while none are predictions, cover a range of possible outcomes over the next 30 years and form the basis of the new strategy CEO Looney announced in August.
First scenario: Due to changes in consumer behavior, crude oil consumption will drop by 50% by 2050, and the share of renewable energy in primary energy will increase from 5% in 2018 % rose to above 40%.
In the second scenario, due to the sharp increase in carbon prices caused by the new energy policy, crude oil consumption will drop by nearly 80% by 2050, and the share of renewable energy in primary energy will It rose from 5% in 2018 to over 60%.
In the third scenario, if government policies, energy technology and social preferences remain “business as usual”, crude oil demand may gradually recover, but even so, in the next 20 years, Demand will remain at 100 million barrels per day.
The report shows that in the first two cases, oil demand will decline due to the epidemic. Spencer Dale, chief economist of BP, said: “Oil demand subsequently recovered, but it has never returned to pre-epidemic levels. The epidemic has advanced the time for peak oil demand to 2019.”
In last year’s outlook, BP predicted that oil demand would increase, growing steadily to about 130 million barrels per day in 2040, but the outlook announced this time was not so optimistic. . BP warned in its latest report that oil demand will fall over the next 30 years. The scale and speed of the decline are driven by improvements in the efficiency of road transport, as well as electrification.
This year, as countries adopted blockade measures to prevent the spread of the epidemic, oil consumption has been severely suppressed. While demand has since improved and oil prices have rebounded, the pandemic is still raging in many parts of the world and the future remains uncertain due to the lack of a vaccine.
According to BP, the epidemic has brought many impacts, including continued changes in people’s behavior, such as an increase in working from home, which will affect economic activity and prosperity in developing countries, and ultimately Affecting oil demand, this also means that it cannot offset the decline in oil consumption in developed countries.
According to BP’s forecast, oil demand will fall below 55 million barrels per day by 2050, and net demand will fall below 30 million barrels per day. Oil demand has fallen mainly in developed economies. In the first scenario, oil demand in India, Asia and the rest of Africa would be broadly flat, but in the second scenario, oil demand would fall below 2018 levels from the mid-2030s.
As a reminder, the market believes that the epidemic will lead to a short-term decline in oil demand, and BP’s report implies that oil demand will be difficult to grow in the future. The factors behind this include new energy policies and environmental protection ideas. Changes in consumer behavior caused by this will undoubtedly��In the medium and long term, it will put pressure on oil prices. It will be increasingly difficult for oil prices to rise sharply in the future, and relatively low oil prices may become the new normal. </p
