Have We Seen Peak Oil in 2021?

December 2, 2020

A decade ago “peak oil” meant a time when we maxed out the production of oil and entered an age of scarcity. The Shale technology boom put that to rest – we have enough oil, if we want, to fry the planet.
Nowadays, peak oil means “peak DEMAND for oil”.

The most stunning thing about BP’s projections for the coming decades is that the “Business as Usual” case assumes that oil use has peaked and will begin a decline.


A year ago, if anyone in the petroleum business had suggested that the moment of Peak Oil  had already passed, they would have been laughed right off the drilling rig. Then 2020 happened.

Planes stopped flying. Office workers stayed home. “Zooming with the grandkids” replaced driving to see family. A year of global hunkering yielded the sharpest drop in oil consumption since Henry Ford cobbled together the first Model T. At its worst, global demand dropped by a staggering 29 million barrels a day.

As a once-in-a-century pandemic played out, British oil giant BP Plc in September made an extraordinary call: Humanity’s thirst for oil may never again return to prior levels. That would make 2019 the high-water mark in oil history.

BP wasn’t the only one sounding an alarm. While none of the prominent forecasters were quite as bearish, predictions for peak oil started popping up everywhere. Even OPEC, the unflappably bullish cartel of major oil exporters, suddenly acknowledged an end in sight—albeit still two decades away. Taken together these forecasts mark an emerging view that this year’s drop in oil demand isn’t just another crash-and-grow event as seen throughout history. Covid-19 has accelerated long-term trends that are transforming where our energy comes from. Some of those changes will be permanent.

It’s often difficult to recognize civilization-sized shifts in behavior until after they’ve occurred. Until the pandemic none of the major oil forecasters had seen an imminent demand peak. The debate won’t end now, especially with signs that the pandemic will ease in 2021. But if we look back from here and see the oil peak clearly in the past, what follows will be the evidence of how the energy future snuck up on us.

Energy analysts usually present multiple scenarios. The gap between each forecast comes down to differing assumptions about government policies, economic conditions and consumer preferences for things such as new electric cars and solar panels. A business-as-usual scenario assumes little impact from policy shifts or new technology.

Most analysts had only predicted declining demand for oil in improbably green scenarios that could only be achieved with far stronger global climate policies. What made BP’s 2020 forecast unique is that peak oil now snuck into its business-as-usual baseline. If technologies and pollution rules improve, the dropoff in demand would be even more swift.

The prospect of a 2019 peak went largely overlooked when BP released its highly regarded Energy Outlook in September. Pinpointing it was made more difficult by the fact that the company hadn’t yet included the latest real-world energy data from 2019.

The chart above updates the outlook with BP’s own oil figures for last year. It also presents estimates using BP’s calculations in exajoules—a more precise measure of energy consumption than a barrels-per-day figure. Without those changes, BP’s scenario suggested oil demand might plateau for the next decade before declining once and for all. BP didn’t respond to requests for comment.

The list of energy analysts who now foresee a peak in oil demand keeps growing. It includes Norway’s state-owned oil company Equinor (peaking around 2027-28), Norwegian energy researcher Rystad Energy (2028), French oil major Total SA (2030), consulting firm McKinsey (2033), clean-energy research group BloombergNEF (2035), and energy-industry advisors Wood Mackenzie (2035). The exporting nations of OPEC put the peak in 2040 while acknowledging that its new forecast might still prove too optimistic for oil.

Notable exceptions include the International Energy Agency, which sees demand “plateauing” but not quite peaking, and the U.S. Energy Information Agency. Both of these agencies advise governments on policy.

Fatih Birol, who leads the IEA, said oil demand can only come down with stronger government policies promoting electric cars and regulating petrochemicals. Even though a peak isn’t guaranteed, he told Bloomberg, “the value of oil is going down” and oil-dependent economies “have to prepare themselves before it’s too late.”

6 Responses to “Have We Seen Peak Oil in 2021?”

  1. jimbills Says:

    Filed under: believe it when I see it.

    I think there’s a ton of pent up demand for travel that will be released when we’re on the other side of the pandemic. Additionally, EVs are still too expensive for most people. Tesla made brief news by eliminating their cheapest car option (at $35K):

    For many, $35K is too high a price (there was a more recent article that pegged it dropping further in 2020, but I can’t find it again):

    Even when EVs are available to the majority, there will be a delay of several years for broad adoption. The analysis mentions more telecommuter jobs because of Covid. That will continue to happen, but most are staying home now only because they feel it’s safer. It’s a big question mark how many of those people will start driving again in 2021-22 as they did in 2019.

    One other observation, even if this is the peak (demand) now, note the amount of oil projected to be used in 2040-2045 compare to 2000-2010. Not very radical.

    • rhymeswithgoalie Says:

      The pandemic is leading to a so-called K-shaped recovery, where the educated and propertied Haves will rebound quickly, and the Have-Littles will have less. The car market depends a lot on the median income of the mass market: The extra cars the rich might buy cannot compensate for the fewer or cheaper cars the working class will buy.

      Cheap cast-off ICE vehicles will have a long tail.

  2. redskylite Says:

    We must remember that the company, B.P, have considerable investments in Russia, the biggest is the 20% share of Rosneft who are quickly gearing up to exploit the oil reserves of the Arctic, as it opens up under climate change. The biggest customer of oil is the transportation industry , as Jimbills notes EV’s are far too expensive for many, while aircraft industry have made progress on electrifying smaller craft, research on larger planes in still in the early stages, as it is shipping. Governments and states are beginning to make pledges of banning new ICE driven road vehicles, but democracies cannot guarantee their pledges as governmental changes can also change policies (as we have seen with Trump).

    Hopefully more and more governments will pledge to ban oil driven road vehicles, with mass popular support behind them, non ICE prices will decline and there will eventually be a clear peak and decline of oil sales.

    It’s getting very late, and no one is clearly leading the way. We have gotten too fond of the darned black liquid.


    UN Report: Despite Falling Energy Demand, Governments Set on Increasing Fossil Fuel Production

    “The coronavirus pandemic has sent global energy demand plummeting, and led many analysts and oil executives to conclude that a transition away from fossil fuels is marching nearer. But a new United Nations report says the world’s leading fossil fuel producers still appear set on expanding their output to levels that would send temperatures soaring past global climate goals.”


  3. Keith Omelvena Says:

    It’s not rocket science to understand exploitation of a finite resource will result in a peak of extraction, followed by a decline. “The Shale technology boom put that to rest” Rubbish! It may have extended time to peak, but it bankrupted those who were stupid enough to invest in it! https://www.worldoil.com/news/2020/6/29/chesapeake-joins-more-than-200-other-bankrupt-us-shale-producers

    • greenman3610 Says:

      agree in general, but exploitation of shale has given a long enough lease on life to oil and gas that we can no longer assume they’ll run out before we fry the planet.
      also agree people are losing their shirts with shale.

  4. redskylite Says:

    Around a year ago a group of scientists advised “To not exceed emissions of one trillion tons of CO2 to the atmosphere will require us to leave about 30% of the known reserves of oil and 80% of the coal in the ground.” This is to avoid catastrophic climate change associated with a density of CO2 higher than 450 ppm in our atmosphere.

    The fact is many countries are still seeking new reserves, example Putin/dying Trump administration and the Arctic, I’m sure considerable reserves still remain undiscovered, especially in the middle east.

    Known reserves today will last around 50 years at current consumption, and this (with continued coal and gas) will certainly tip us over into dangerous, catastrophic climate change.

    Earlier I stated there is no clear leader, but today I read that Denmark have seen the light.

    That is a small but hopeful sign that some of us can still follow science over short term financial gains.

    “Denmark has brought an immediate end to new oil and gas exploration in the Danish North Sea as part of a plan to phase out fossil fuel extraction by 2050.

    On Thursday night the Danish government voted in favour of the plans to cancel the country’s next North Sea oil and gas licensing round, 80 years after it first began exploring its hydrocarbon reserves.”


    “In short, we’ve spent about half of our total allowance of carbon that can be emitted to the atmosphere without a global climate catastrophe. To not exceed emissions of one trillion tons of CO2 to the atmosphere will require us to leave about 30% of the known reserves of oil and 80% of the coal in the ground. This will be a challenge given that new oil fields are coming “on line” and the likelihood of falling prices at the pump.”


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