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The energy watchdog says it’s possible global oil consumption could keep increasing through the middle of the century.
By Grant Smith
For several years, one of the world’s top oil forecasters seemed sure that demand growth would soon plateau. That certainty is fraying.
On Wednesday, the International Energy Agency in Paris — founded in the 1970s as the West’s energy watchdog — said it’s possible global oil consumption could keep increasing through the middle of the century.
It’s not the default assumption of the IEA’s latest annual World Energy Outlook, which continues to feature a projection that shows demand growth stopping around the turn of the decade.
But it is being hailed by critics of the agency such as the Organization of the Petroleum Exporting Countries, which says the once “anti-oil” IEA has had a “rendezvous with reality.” It may also be welcomed by US Republicans, who have sought to choke off funding over the organization’s stance on clean energy.
US President Donald Trump is well-known for his enthusiasm for fossil fuels, hostility toward renewable sources and readiness to play hardball.
While the IEA’s top official pushed back at the idea it’s bowing to US pressure, oil traders and investors may suspect a political motive behind the agency’s conversion.
After all, the IEA’s near-term forecasts indicate that oil demand growth is indeed slowing dramatically as China pivots toward electric vehicles, and on track to top out before 2030.
It’s hard to reconcile those estimates with the prospect that world oil consumption could instead keep increasing for another two decades, and in the process grow by 13 million barrels a day — more than the total output of Saudi Arabia.
In some ways, the IEA’s revision is just a reflection of the zeitgeist. In September, oil major BP Plc — which had once led the corporate charge on shifting from fossil fuels — similarly delayed forecasts that consumption could peak as early as this year.
But floating the prospect of growth all the way to 2050 clouds the outlook much more. And for companies and investors trying to plan for the long term — contending with the risk of plowing cash into “stranded assets” — such wavering only makes their task harder.
—Grant Smith, Bloomberg News
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