Energy industry: Peak Oil demand may be in 2020 study suggests

Energy industry: Peak Oil demand may be in 2020 study suggests

In times past when one talked about “peak oil’ one was referring to supply. The theory was that as supplies of fossil fuels began to run out, their price would explode, driving the need for renewables. However, fracking and other technologies place the tipping point of peak oil supply into the indefinite future. Oil and gas companies predict that demand for their product will also persist as far as the eye can see.

A study cited in Carbon Brief questions that presumption. Imperial College’s Grantham Institute in London suggests that another kind of peak oil will occur in 2020, alluding to demand, leading to a steady decline afterward. Natural gas, which has become far cheaper because of fracking, will continue to prosper, but then decline as well in the more distant future.

The study makes a number of presumptions.  Among the presumptions is that the cost of renewable energy and electric vehicles will decline to such an extent that they will be competitive, if not cheaper, than fossil fuel sources and vehicles. However, the study also presumes some sort of “climate action” by governments that raises the price of fossil fuels, thus making them more costly in the fullness of time than renewables. Considering the current American presidential administration’s approach to energy, that prospect would seem unlikely.

Even so, the idea that market forces and the advance of technology will get the world away from fossil fuel energy is a beguiling one. Government fiat has been an imperfect way to create industrial and technological change. Only when the market allows for such to happen will our energy economy make the shift that many believe is necessary to deal with climate change.