Environmental Engineering Reference
In-Depth Information
The future of oil
Why we should welcome a peak in oil demand, but fear
a peak in oil supply
Oil remains the biggest primary energy source. (Electricity has to be
derived from something else and so is a secondary energy source.) Of glo-
bal primary energy demand in 2006, oil accounted for 34 percent, coal 26
percent and gas 21 percent. More than half (52 percent) of world oil now
goes into transport: oil fuels more than 90 percent of the world's trans-
port needs. While transport's demand for oil keeps rising, especially in
developing countries, the share of world electricity generated with oil has
halved in the last thirty years to just six percent in 2006, again mainly in
developing countries. So the broad picture is that oil demand would seem
to have peaked in richer, industrialized countries, which have had some
success in weaning their power sectors off oil reliance, and are struggling
to do the same with their transport sectors.
But it is too early to speak of any peak in
overall
oil demand. Demand
is still rising among some major developing countries that are populous
(India), rich (Saudi Arabia) or both (China). The International Energy
Agency forecasts that over eighty percent of the increase in oil demand to
2030 will come from China, India and the Middle East. It is a pity that a
peak in oil demand still looks some years off: a peak in oil demand would
match the peak we are seeing in the supply of easy-to-find and easy-to-
extract oil (outside of the huge reserves controlled by OPEC producers).
Less demand for oil would keep the price from soaring as supply becomes
scarcer. Ever-increasing world oil demand will have just the opposite
effect, and could one day make the mid-2008 price rise to $147 a barrel
look cheap.
Peaks of supply and demand
Oil supply will probably peak before oil demand. In many parts of the
world it is happening already, as shown by the chart overleaf. Why does
the energy world spend so much time discussing “peak oil”, when “peak
gas” or “peak coal” go undebated? Well, there are three good reasons why
we would definitely not want a runaway rise in the oil price - which would
be triggered if world oil supply goes into a clear decline.
The first is that everyone is affected by the oil price, because oil is still
the world's main primary energy source. There are few substitutes yet
