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Global demand for oil will not peak until 2030, according to BP – suggesting it will take longer than expected to switch away from fossil fuels. Its latest annual Energy Outlook pushes back the date of peak oil demand by five years. Last year’s report said it would be reached this year.
BP pointed to a slowdown in improvements in energy efficiency that means more oil will continue to be needed. Chief economist Spencer Dale, who compiled the outlook, said recent ‘sustained weakness’ was a key factor shaping global energy over the past five years. ‘In particular, it underpinned the continued steady growth in fossil fuels despite the rapid growth in low carbon energy, led by solar and wind,’ Dale said.
The forecast appears to chime with BP’s decision to refocus on oil and gas in a reversal of its strategy under previous boss Bernard Looney, who tried to steer BP towards renewable energy such as windfarms, to the chagrin of investors. His successor, Murray Auchincloss, has switched focus to fossil fuels.
The forecast may also make uncomfortable reading for Energy Secretary Ed Miliband, whose ban on new North Sea drilling, together with a windfall tax, is accused of severely damaging the UK industry. BP’s new report forecasts that global oil demand will hit 103.4m barrels per day by 2030 before falling to 83m by 2050.
Last year it predicted demand peaking at about 102m this year, but slowing efficiency gains have changed the picture. Dale, a former chief economist at the Bank of England, said: ‘The world is consuming more of all kinds of energy. The trends that underpin that demand help determine what will be produced and consumed in the years to come.’
He pointed to the potential impact of heightened global tensions – such as the war in Ukraine and US tariffs – on the global energy outlook. Growing fragmentation could persuade some countries to reduce their dependency on imported oil and gas and switch to greater use of electricity, powered by low carbon sources.
But countries with fossil fuels could go the other way – leaning on domestic resources instead of importing equipment for renewable energy infrastructure. And Dale noted the significance of AI in driving higher power usage.
He said: ‘The seemingly exponential growth in data centres to support the increasing use of artificial intelligence applications provides an important new source of energy demand, especially in some markets such as the US where growth in power demand over the past decade virtually stalled.’
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