Baku, Azerbaijan, Jan.16
By Leman Zeynalova – Trend:
The broad consensus amongst energy commentators and forecasters is that global oil demand is likely to continue growing for a period, driven by rising prosperity in fast-growing developing economies, BP said in its “Peak oil demand and long-run oil prices” paper.
But that pace of growth is likely to slow overtime and eventually plateau, as efficiency improvements accelerate and a combination of technology advances, policy measures and changing social preferences lead to an increasing penetration of other fuels in the transportation sector, said BP analysts.
“Even once oil demand has peaked, consumption is unlikely to fall very sharply – the world is likely to consume significant amounts of oil for many years to come. Inherent advantages of oil as an energy source, particularly its energy density when used in the transport sector, means that the eventual peaking in oil demand is not expected to trigger a significant discontinuity or sharp fall in demand,” said the analysis.
Moreover, BP believes that the persistent decline in existing oil production means that significant investments in new oil production are needed just to maintain existing levels of production.
“Under almost any scenario, the world is likely to require significant amounts of investment in new oil production for many years to come. If the peaking in oil demand (or even just the prospect of peaking) causes prices to fall, this is likely to trigger a so-called “rebound effect”, in which falling prices stimulate higher demand,” said the analysts.
The real significance of peak oil demand, according to BP is that it signals a shift in paradigm from an age of (perceived) scarcity to an age of abundance.
“The conventional wisdom that dominated oil market behaviour over the past few decades, based around the notion of peak oil ‘supply’ and the belief that oil would become increasingly scarce and valuable over time, has been debunked,” said the report.
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