Publications: The Petroleum Economics Monthly

Will Global Oil Consumption Peak by 2025? (September 2016)

The International Energy Agency's executive director Fatih Birol, for example, asserts that oil use will keep rising from current levels through 2040. Executives at Shell, on the other hand, believe increases in oil use could peak within the next ten years, possibly by 2023. This difference of views has important implications for the oil industry. The IEA’s Birol claims it will take investments of more than $44 trillion in oil infrastructure development over the next twenty-three years to meet the projected rise in consumption.On the other hand, the oil sector’s total required investment over the period could be one quarter of that amount or less if the early zenith envisioned by Shell occurs.

The potential impacts of this discrepancy on the oil industry’s financial health are obvious. Trillions could be wasted if companies and oil-exporting countries meet Birol’s investment target only to see the world evolve as anticipated by Shell. How then should companies and governments proceed? The answer is not clear because the future is, as the saying goes, unknowable. However, one can learn from the past. This issue of The Petroleum Economics Monthly, dated September 2016 but distributed in December 2016, approaches the question of future oil consumption by examining forecasts made at earlier dates. We have analyzed projections issued in 1972, 1979, 1990, and 2007 in detail to determine their successes and failures. Our goal was not to criticize but learn.