It's now 2022, and despite all the predictions of “peak oil” over the past few years, growing global oil demand is here to stay. In light of the energy crises seen globally throughout 2021, it’s abundantly clear that the world will need all forms of supply to keep the lights on and the economy moving for families around the world.
Given continued growing demand levels, it is worth mentioning the turnaround in messaging on some of these “peak oil” scenarios.
Non-governmental organizations (NGOs) and environmentalists who oppose fossil fuels were celebrating the idea that the “end of oil” was nigh when the International Energy Agency (IEA) released its Net Zero by 2050 pathway in May of last year. Now, more than six months later, we know from the IEA (and other similar organizations) that global oil demand is roaring back once again and that the statements by these groups are inaccurate.
We find it peculiarly odd that opponents of Canada’s energy sector continue to send out messages like the one seen in this tweet below. For example, we know this statement is already inaccurate as it says “2040” when the link referenced says 2050. Additionally, in the face of up-to-date energy demand statistics, it is concerning misinformation like this is still being shared.
There are a handful of problems with this tweet that we’d like to point out in our efforts to present balanced, fact-based and informed conversations around Canada’s world-class resources sector. Let’s discuss those, shall we?
#1 - Current "Peak Oil" Projections
Anyone tweeting something like this should know that commodity demand levels are highly time-sensitive. For example, global oil demand at the beginning of 2020 was vastly different from what it is today. Yet, under the pretense of being “current,” this tweet seeks to mislead people into believing that oil demand will drop 75 per cent by “2040” based on a scenario published back in May of 2021.
From current trends, we know that the likelihood of such a substantial drop within 18 years is highly improbable.
Also, from the most recent oil demand projections by trusted energy research firms and organizations, we know that oil demand is projected to grow for many years yet – at least when judging by the way the world is now. In fact, while some of these groups have predicted ‘peak’ oil sometime in the mid-to-late 2020s, others aren’t expecting the event to come about until around 2040.
Current global trends give us some much-needed context and insight into what is expected for oil consumption levels for decades to come. A quick online search lets anyone know that.
#2 - Global Oil Demand & Energy Crises
Several current oil demand projections show that our world is hungry for more oil and will be for a very long time yet. The IEA, U.S. Energy Information Administration, Wood Mackenzie, S&P Global Platts, BP Energy, and OPEC are just a few organizations predicting that ‘peak’ oil will happen anywhere between 2019 to 2040 and beyond, and to be fair the 2019 projection has already proven false.
Meanwhile, current global energy supply crises are making many of the world’s largest emitters rethink their “transition” strategies altogether. Instead, these countries are opting for national energy security through the continued use of natural gas, coal, oil, nuclear and other established forms of power generation. As a result, demand for fossil fuels is reaching new record highs and is poised to continue growing alongside the growing energy needs of emerging market economies.
See some of the news headlines from around the world that clearly indicate we can’t just turn our backs to fossil fuels overnight, but rather that the energy transition will likely take longer.
- Global Energy Shortages: 10 Headlines from Around the World in 2021
- 10 Dire Warnings of Underinvestment in Oil & Gas
#3 - A Decades’ Difference?
When citing reports, it is critical to be accurate with the delicate facts and statistics they present. In this case, the tweet above suggests that the IEA’s Net Zero to 2050 pathway – emphasizing ‘2050’ – will see global oil demand drop 75 per cent by “2040.” However, we know that this isn’t what was reported by the IEA.
On page 47 of the referenced source, the Paris-based agency describes what a net zero pathway by 2050 would look like for global energy markets. It reads that “…coal demand would decline by 90 per cent, oil by 75 per cent and natural gas by 55 per cent by 2050.”
Is there a typo in this tweet? Perhaps. Either way, the reference to a substantial drop in global oil demand by “2040” is both misleading and inaccurate.
A quick search online will find that demand for fossil fuels, like oil, is expected to increase. For example, Googling “global oil demand projections” in Canada shows the IEA’s Oil Market Report of October 2021 as a top-five result, which predicts demand to reach 104.1 million barrels per day (bpd) by 2026, up by 4.4 million bpd versus 2019 levels. Read a little deeper into this report and you’ll find that the IEA had to revise its 2021 and 2022 forecasts upward by 170,000 bpd and 210,000 bpd to adjust for higher-than-expected demand levels.
Okay, sure, we all make mistakes sometimes. But when talking about a sector that provides hundreds of thousands of jobs for Canadians and generates hundreds of billions of dollars in revenues for our governments, accuracy is paramount.
Global oil demand is growing – not dropping – and sustainable producers in Canada should be go-to suppliers of choice in a world that is ever increasingly focussed on environmental outcomes. More Canadian oil on global markets benefits our families and governments well as the global environment.
- Yes, We Can Support Canadian Oil & Climate Action
- Canada Has Set the Bar High for Climate Action. Let's Recognize That Fact.
#4 - Canadian Oil Production Trends & Prices
The gloomy predictions for Canadian oil in this tweet thus far have not happened. Once again, the author seems to forget all current trends, statistics and analyses that show Canadian oil production is at an all-time high and our governments are reaping the rewards.
After a rough few years in 2020-21, Alberta - responsible for approximately 80 per cent of Canada’s oil production - is soaring back towards balanced budgets as a result of sustained high WCS benchmark prices. Meanwhile, the IEA is predicting that Canadian oil production will smash all records in 2022.
These oil revenues are used to pay for things such as schools, hospitals and roads - and the people who staff and build them. As well, let’s not forget that Alberta has contributed more than $600 billion to the rest of Canada, largely a result of the prosperity generated by the oil and gas sector.
If anything, selling more of our responsibly produced oil to global markets should make one thing abundantly clear for Canadians. And that is the more oil we sell, the more revenues we generate, which in turn creates enormous social benefits for our communities here at home.
#5 - Global Oil & Gas Investment
It’s a new year, and global oil demand has continued its historical trend to return to previous record highs after a dip in consumption.
Today, major oil producers worldwide are making huge investments in the development of oil and gas fields. Some examples include:
- UAE to invest $127 billion in 2022-2026 as oil and gas reserves rise
- Norway to spend $8.8 billion to develop the world’s northernmost oilfield
- Brazil raises investment plan to $68 billion through 2026
- Iran plans on $145 billion of investment into oil and gas sector over next eight years
- Kuwait to invest $6.1 billion in oil exploration over next five years
In May of 2021, the IEA suggested that no new investments in oil and gas be made if the world wanted to reach net zero emissions by 2050. It seems that global energy producers aren't heeding that call, something that this tweets' author could have determined with a quick online search.
See the following article for more examples of what other nations are doing to attain more global market share in a world that today is ever-increasingly hungry for more oil:
Let’s Have a Balanced Conversation
Let’s have a balanced conversation around global oil and gas demand and why Canada should be a go-to supplier of choice with its exemplary record on Environmental, Social and Governance indices, shall we?
Our nation's sustainability record means that as long as the world needs oil, it should come from Canada which benefits our families at home AND the global environment.
When you’re discussing a topic that could mislead Canadians and hurt the long-term prosperity of hundreds of thousands of families and our country altogether, accuracy and research are both critical -- wouldn't you agree?!
Balance is important.— Oil Sands Action (@OilsandsAction) January 9, 2022
As long as the world needs oil and gas, it should be #Canadian.
Let’s talk about our record of innovation, environmental stewardship, and reducing emissions. pic.twitter.com/C1oehbkk5F
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