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Disruption
What Peak Oil Demand Would Do to the Global Economy

“Peak oil” supply concerns have been dismissed as groundless foolishness in recent years, with the American shale revolution acting as the nail in the coffin of the notion peddled by doomsaying greens. But though oil production is booming around the world, and despite the fact that a global glut has brought crude prices down to less than half of what they were 28 months ago, there’s a new “peak” concern for crude: namely, that demand for oil is going to begin to fall within the next 20 years.

Unlike those fears over hydrocarbon scarcity, there are some concrete reasons to be concerned about the future of oil demand. Electric vehicles are gaining market share, and because they don’t run on refined petroleum products, their ascendancy will naturally impact the oil sector. But the global economy is intricately tied to the oil industry, and if demand does peak around 2030, trillions of dollars of economic activity could be affected. Bloomberg reports:

A quarter of outstanding global corporate debt, or as much as $3.4 trillion, is linked to the utility- and auto-industry bonds that rely on fossil fuel activities, [Fitch Ratings] wrote in a report published Tuesday.

Batteries have the potential to “tip the oil market from growth to contraction earlier than anticipated,” according to Fitch. “The narrative of oil’s decline is well rehearsed — and if it starts to play out there is a risk that capital will act long before” and in the worst case result in an “investor death spiral.”

A lot could happen between now and then, but it’s worth keeping in mind just how disruptive even a slight dip in overall oil demand could have for companies the world over.

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  • JR

    Again with the batteries unicorn. We will be talking about this battery nonsense in 2030 and just like now, it will be just around the corner.

  • Andrew Allison

    “Electric vehicles are gaining market share”, from infinitesimal to insignificant! Has TAI not noticed the relationship between gasoline price and IC-powered vehicle mileage?

    • CaliforniaStark

      Oh and by the way, they also run on fossil fuels — overwhelmingly coal or natural gas; the major source of electricity in this country. .

  • J K Brown

    Oh no, I wonder what might happen if there is a long term glut of a feedstock that can be made into a multitude of products while there is no commiserate decline in energy usage? The pattern of churn might shift, but not the overall economic activity.

  • Bill_Woods

    “The Stone Age didn’t end because we ran out of stones.” — Sheik Yamani

  • louis_wheeler

    Where are you going to get the energy to recharge the electric cars? The Greens hate Nuclear Power as much as they do oil. UN Sustainable Development Officials say that maximum population should be around 500 million. Hence, 94% of the people living today must die. The Greens want you to die, starving in the dark.

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