The concept of peak oil has been around for decades. The term refers to the point when maximum oil production is reached, after which output goes into irreversible decline as reservoirs are bled dry or because new energy sources such as batteries push planet-warming petroleum out of the picture.
So far, the concept has been a fraud – oil production and demand keep rising – and that’s bad news for the net-zero drive that keeps the annual climate conferences in business.
The next one, COP28 (the United Nations’ 28th Conference of the Parties), starts at the end of the month in Dubai. It, like most of the 27 previous COPs, will almost certainly be a bust, all the more so since its host is an oil powerhouse – Dubai is part of the United Arab Emirates, an OPEC stalwart since 1967 – that believes the latest peak-oil forecasts are wildly inaccurate. Peak oil will, of course, happen at some point, since hydrocarbons are a finite resource, but probably not soon enough to prevent potentially catastrophic climate change.
The extraction and burning of oil and natural gas are responsible for more than half of the world’s output of greenhouse gases, according to the International Energy Agency. The fuels not only refuse to die, they are more alive than ever, confounding endless peak-oil forecasts.
Those forecasts began in the 1880s, when geologists feared that the wildcat wells in Pennsylvania, which began gushing oil in 1859, were tapped out, putting a premature end to the American oil industry. In 1956, M. King Hubbert, a renowned geologist who worked for Shell and, later, the United States Geological Survey, predicted that U.S. production would top out in 1970 and the global peak would come in 2000. His younger contemporary, Ken Deffeyes of Princeton University, said production would peak in 2005. During the pandemic, BP, one of the world’s biggest oil companies, put out a scenario that said the peak might have arrived in 2019. Shell’s then-CEO, Ben van Beurden, had a somewhat similar view, arguing that postpandemic oil demand might never return to its prepandemic levels.
And so on. There is little reason to believe that the latest forecasts will be less wrong. Despite the waning birth rates virtually everywhere, the global population keeps rising (the UN says it will reach 9.7 billion by 2050 from today’s eight billion); electric vehicles are flooding into car dealerships, but what is being saved at the gas pump is being offset in good part by soaring production of aviation fuel and petrochemicals.
The latest prediction from the IEA, the go-to energy researcher for Western governments, is that oil demand will increase to 105.7 million barrels a day by 2028, a new global high and 6 per cent more than 2022′s level (in 1995, the year of the first COP, global demand was about 70 million barrels a day). The expanding output for another five years will make the 2015 Paris Agreement climate targets hard to reach. To keep global warming to no more than 1.5 degrees Celsius above preindustrial levels, the agreement says total emissions need to be reduced to 45 per cent below 2005 levels by 2030 and must reach net-zero by 2050.
Good luck with that, as the IEA forecast may be optimistic. OPEC certainly doesn’t believe the IEA’s call, and its members, led by Saudi Arabia, know a thing or two about oil production and demand. It says both are still rising relentlessly. In the World Oil Outlook report, released last month, it predicted demand will reach 116 million barrels a day by 2045. “What is clear is that the world will continue to need more energy in the decades to come as populations expand, economies grow, and given the pressing need to bring modern energy services to those who continue to go without,” OPEC secretary-general Haitham al-Ghais of Kuwait said in the report.
Saudi Arabia, the world’s top oil exporter, is putting billions of dollars behind its bet that peak oil will remain an environmentalist and climate scientist fantasy. It has told state-owned Aramco to add another million barrels a day of capacity, taking it to 13 million by 2027. “Why would we go to 13 million barrels a day if we know that there is no demand for it?” Saudi Energy Minister Prince Abdulaziz bin Salman recently said at an investment conference in Riyadh.
Oil forecasts are notoriously difficult to make, and it is possible the IEA is right and OPEC is wrong. But don’t count on it. The peak-oil guessing game has proven to be just that, a guess, and all the calls have been wrong so far. And even if the IEA is right and peak oil comes before 2030, there is little doubt that demand will remain strong for many years. Oil is relatively cheap and reliable and will not be abandoned by developing countries any time soon.
This reality may ensure that COP28 goes nowhere. No COP agreement has triggered a drop in emissions. The upward emissions trend will almost certainly remain for some time – along with the global warming trend.