Opinion

Why Policymakers Should Reject The IEA’s Silly Peak Oil Notions

In a statement published on the OPEC website Thursday, Secretary General Haitham Al Ghais said the concept of “peak oil demand” is nowhere to be seen in the cartel’s projections for future global crude oil demand.

“[A]s we look to the future it is the very versatility of oil that ensures that we do not see peak oil demand on the horizon,” said Al Ghais. “Just as peak oil supply has never transpired, predictions of peak oil demand are following a similar trend.”

In my own research, I have been able to trace predictions for the world reaching so-called “peak oil” all the way back to the 1880s. From that distant beginning through around 2010, peak oil theory was always about the world having somehow reached a peak in crude oil supply as all the big reserves had supposedly already been discovered. For about 125 years, constant advances in technology and a creative and innovative industry invariably proved such pronouncements wrong, often laughably so.

With the ramping-up of the climate alarmist movement in the first decade of this century, narratives surrounding this always-wrong theory began to shift over to the demand side of the equation. Some anti-oil-and-gas activist groups even adopted the theory as a means of promoting the equally silly notion that the world’s remaining oil resources could simply be left in the ground as demand for them would soon be overwhelmed by rising demand for alternatives. A decade later, that theory has also been proven laughably wrong despite the “investment” of many trillions of dollars in debt-funded subsidies.

OPEC’s statement stands in stark contrast to the projection by the International Energy Agency that the world will somehow achieve peak oil demand by 2030. Al Ghais alludes to this preposterous notion, calling it a “dangerous commentary, especially for consumers,” that “will only lead to energy volatility on a potentially unprecedented scale.”

Al Ghais’ statement comes in the wake of revised oil-demand growth projections from the IEA and OPEC, along with Goldman Sachs and the US Energy Information Administration (EIA) for the remainder of 2024 and into 2025. Where the IEA revised its 2024 projection downward to 1 million barrels per day (bpd) for 2024, even it projects a more robust 1.5 million bpd in growth for 2025.

The EIA raised its own growth estimate for 2024 from a very conservative 900,000 bpd to 1.1 million bpd. Goldman Sachs comes in at a stronger 2024 estimate of 1.25 million bpd based on strong global economic growth. The bank cites robust growth in jet fuel, petrochemical-driven LPG and naphtha, and gasoline and diesel demand as key drivers of this growth.

For its part, OPEC continued to hold steady to its original 2024 projection for 2.25 million bpd growth, along with strong 2025 growth of 1.8 million bpd. All these entities expect the preponderance of new demand to come from China, India and the developing economies of the global south. None of them agree with the IEA’s projection for peak oil demand happening in this decade.

“Against this backdrop,” Al Ghais writes in his concluding paragraph, “stakeholders need to recognize the need for continued oil industry investment, today, tomorrow, and many decades into the future given the products derived from crude oil are essential for our daily lives. Those that dismiss this reality are sowing the seeds for future energy shortfalls and increased volatility, and opening the door to a world where the gap between the ‘energy haves’ and ‘energy have nots’ grows even further.”

Unfortunately, the IEA, which is funded via a dues structure by 31 nations including the United States, has earned a reputation for basing its projections more on political considerations than the data at hand. The agency’s status as a clear outlier in its promotion of the long-debunked peak-oil theory only serves to reinforce that reputation.

As Al Ghais says, it is crucial for governments to base energy decisions on the reality of the world at hand, rather than on the desire to continue pushing costly and unrealistic energy fantasies. Doing otherwise risks a major energy crisis, and probably sooner than anyone thinks.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.

 

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