A report from Opec has shown that over the next five years the production of oil will soar to new records due to a drastic rise in demand from airlines. The increase in production is likely to offset the reductions expected from the arrival of electric cars.
The forecast comes as a disappointment to environmentalists who were counting on the advent of electric cars to help propel the world towards a completely clean future.
The increase in demand is coming primarily from China and India and the production will come from countries outside of Opec. Explosive growth in fracking in the United States is just one of the boom areas for production.
By 2040, Opec believes that the global oil demand will hit 112 million barrels per day, a huge increase from the current level of almost 100 million. The demand will be driven in large part by the transportation and petrochemicals sector.
Despite prominent figures and large swathes of the public voicing their concerns about the impact of burning coal on the environment, coal will continue to be burned in record amounts. While coal usage in OECD countries is predicted to go down by about a third by 2040, it is going to increase by about 20% in developing countries.
Meanwhile, airlines will become the fastest growing user of oil and will increase its consumption by about 2.2% year on year. The largest absolute growth will come from road transport.
The current number of vehicles on our roads is about 1.1 billion, but this number is expected to more than double to a whopping 2.4 billion by 2040. Opec estimates that only 320 million of these cars will be electric, unless battery-powered cars take off rapidly, in which case the number could reach 720 million.
However, even if the higher figure for electric cars is achieved, the demand for oil will only drop to 109 million barrels per day.
Projections in the report also showed a less promising future for renewable energy. The forecast showed that by 2040 renewable energy will only supply 20% of the global energy demand.
The Opec report evaded making any price predictions. However, motorists are unlikely to see fuel prices falling anytime soon as the International Energy Agency stated that there is a strong risk that oil prices will rise over the next few months.
Oil companies are anticipating peak oil demand to occur in the 2030s, but the possibility of it arriving in the 2020s has not been eliminated.
Opec has identified the US as a key player in production growth over the next decade and believes it will soak up most of the growth. The US’s tight oil production projection is strong and Opec admitted it will outperform the organisation. However, it believes that this production will peak in the second half of the 2020s, at which point Opec will be able to regain its stronghold. Ultimately, Opec hopes to increase its share of world oil supply from 34% to 40% by 2040.
Finally, the report was sceptical as to whether Trump’s pro-fossil fuel pushes will actually help the US oil industry. Particularly as production flourished under Obama’s far more onerous regulations.