Peak oil demand could be coming much sooner than expected, a new report suggests.
The Boston Consulting Group (BCG) has analysed three different scenarios that would result in global peak oil demand between 2025 and 2030.
While that doesn't mean a doomsday for the oil industry, companies, investors and governments must factor the real possibility of global peak oil demand into their projections, the report argued.
The three disruptive scenarios the firm looked into were: the widespread adoption of electric vehicles, a combination of slower economic growth and efficiency gains or the substitution of oil with cheaper natural gas.
Electric vehicle adoption
Car makers including Tesla, General Motors and Volkswagen plan to bring affordable models of electric vehicles to the mass market by 2020, but they still account for only one per cent of global new car sales.
However, assuming a scenario in which there is a decrease in the unsubsidised total cost of ownership of electric vehicles as well as more charging points and faster charging, electric cars could come to account for 90 per cent of the developed market car fleet by 2040 and of the emerging market fleet by 2050, the report said.
This would result in peak oil demand between 2025 and 2030.
Slower GDP growth and increasing efficiency
Assuming global economic growth of three per cent a year in real terms and gains in fuel efficiency driven by tougher regulatory standards, the world would hit peak oil demand by 2026, BCG said.
Efficient self-driving technology and lighter materials would mean average automobile fuel consumption in OECD countries would halve by 2040.
This scenario condiers a world where cheap, abundant natural gas was available in a major region outside the US at prices in line with US gas prices at the beginning of the shale boom. This would result in a greater substitution of a crude oil derivative with natural gas-derived ethane as feedstock for petrochemicals.
If a major energy consumer like China jumped on this bandwagon, oil demand would peak in 2025 and then plateau.