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Supply Chain Graphic of the Week: Is Peak Oil Demand Coming Soon?


Some Oil Companies Say Peak Demand Could Come in Less than 10 Years, While Others Say Oil's Future Remains Bright for Decades

June 7, 2017
SCDigest Editorial Staff

Many used to be worried about so-called "Peak Oil," when global oil output would reach its maximum - once thought to be coming around 2008 - sending prices soaring and having an untold impact on economies and society.

Fracking in the US and elsewhere has for now at least to the back burner.  Instead, the oil patch is now looking intently at possible "Peak Demand," when global oil consumption reaches it mazimum.


A combination of more efficient car engines, a trend towards electric vehicles, rising using of solar and wind power and more have many convince Peak Demand is near - with a huge impact on society, the supply chain, the global warming discussion and more.

The Wall Street Journal reports that forecasts for peak oil demand diverge by decades. For example, the Paris-based International Energy Agency predicts that demand will grow, though slowly, past 2040.

Meanwhile, the two biggest US oil companies, Exxon Mobil and Chevron, say peak demand isn't in sight, while some big European producers predict that a peak could emerge as soon as 2025 or 2030.

A chart of various predictions for Peak Demand compiled by the Wall Street Journal is included below as our Supply Chain Graphic of the Week.
(Note: Statoil is a Norwegian oil company; Total is a French oil company).



"Nobody knows" when demand will peak, Spencer Dale, group chief economist at BP, recently told the Wall Street Journal.

Of course, the point of reaching Peak Demand depends on many factors - notably government policies, but also the rate of adoption of electric cars.


Of course, among those closely tracking this trend are investors, wondering if the value of oil related companies will start to fall in the face of this trend. But supply chain practitioners need to pay close attention to, as reaching or approaching Peak Demand likely will drive prices way down – perhaps complicating the ROI on some alternative fuel programs.

And what Peak Demand will do to geopolitical issues is very unclear – but worrisome. What will happen when economies such as Russia, Nigeria and those in the Middle East which depend very heavily on oil revenues see that income stream begin an inevitable decline is anyone's guess.

Any Feedback on our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback section below.


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