BP: Peak Demand Will Happen Before Peak Supply

Various blogs on the site over the last few months have warned about what peaking global demand will do for the oil industry.

Last August in the blog “What About the Demand-Side Warning?” we quoted Lorne Stockman, the author of report on how reducing oil demand might affect the tar sands.

Stockman said that the time “A peak in oil demand was barely discussed even a year ago, but now it is a viable idea. When it happens, I wouldn’t want to guess, but it will happen sooner than we thought. There has been lots of talk about a supply peak, but it is good to start talking about a demand peak, and that has huge implications for these companies.”

Many have been dismissing peak demand as something that would happen decades away, but now we have it from the horse’s mouth that its sooner than we think.

The CEO of BP, Tony Hayward, has said that global peak oil demand is set to peak between 2020 and 2030. And that will be before supply peaks.

He has changed his tune. Just last summer, Hayward was one of those saying that demand for oil would peak decades into the future.

But not anymore. He now argues that government policies in the developed world are eroding demand at the rate of 1 percent per year.  Such is the falling demand that there was an oversupply of refineries, which is prompting oil companies to close and sell facilities.

According to Hayward, world oil demand will peak sometime after 2020 at a maximum of around 110 million barrels per day. “World demand will peak before its supply peaks because there is plenty of oil in the world, there really is. There are some challenges getting it out in some places, mainly to do with geopolitics, but there is plenty of oil in the world.”

Hayward now believes the oil industry will never sell more gasoline in the United States or Europe than it had done during the boom in 2007.

Hayward’s revised prediction comes months after Deutsche Bank forecast it would peak in six years’ time.

Who is going to be proved right and what does it mean for the costly tar sands?