Through Andres Guerra Luz and Elizabeth Low at 04/16/2021
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(Bloomberg) – Add Goldman Sachs Group Inc. to the list of forecasters calling for peak oil demand as soon as possible.
The bank advanced its peak oil demand forecast in the transportation sector by one year to 2026, if not sooner, in large part due to the accelerated adoption of electric vehicles. Global crude consumption will continue to increase this decade due to jet fuel and petrochemicals, but growth will be at an “anemic” rate after 2025.
Goldman is the latest to reassess what the end of oil demand growth will look like. Among the more aggressive calls is that of BP Plc, which said last year that the era of growing oil demand may already be over, while the International energy has adopted a more conservative view than BP, with demand plateauing around 2030.
More recently, Wood Mackenzie Ltd. warned of the “serious” risks for oil companies that do not prepare for an accelerated energy transition. If governments act aggressively to reduce greenhouse gas emissions in accordance with the Paris Climate Agreement, oil consumption would start to decline as early as 2023
“Government policies leading to higher efficiency gains and reduced emissions have had the greatest impact on the demand for road transport,” Goldman analysts including Nikhil Bhandari and Damien Courvalin said in a report. “Petrochemicals will become the new base load for oil demand, driven by economic growth and rising consumption, particularly in emerging markets.”
The avoidance of peak oil this decade largely comes as economic growth continues in emerging markets, while for developed markets, Goldman sees aggregate demand for oil never to return to 2019 levels. road transport, which accounts for 43% of global oil consumption, is also exacerbated by a shift towards permanent work-from-home behaviors in the aftermath of the pandemic, according to the report.
Tightening emissions targets in the United States and Europe are boosting prospects for increasing penetration of electric vehicles, which, if adopted at an even faster rate, could push up demand for road transport a year earlier than the bank’s baseline scenario. At the same time, significantly higher oil prices could also push the peak in aggregate oil demand forward, the bank said.
For others in the oil and gas industry, the end of oil demand growth is still far from over and fossil fuels will still be needed as countries strive to meet their environmental goals. Pioneer Natural Resources Co. CEO Scott Sheffield set peak consumption at 2035 at the BloombergNEF summit earlier this week.
Although the future is lower in carbon, oil continues to help meet the world’s robust energy needs and has remained essential even as the pandemic ravaged global economies, said Bruce Niemeyer, vice president of the world. strategy and sustainability at Chevron Corp.
“It’s a very big planet, with a lot of needs around the world,” Niemeyer said at Wednesday’s summit. “As we work towards that lower carbon future, we need to be very mindful of today’s energy system, its size and how it can evolve to become lower carbon and less carbon intensive. in carbon for everyone. ”