Oil demand is set to fall in the age of gas
The conventional wisdom holds that global oil demand will continue to rise. Demographics and the need to fuel emerging markets make it so, says the consensus in the energy industry. However, the consensus is wrong. This is due to the substitution of natural gas – often obtained through the hydraulic fracturing of shale rock, or fracking – for oil.
The shale revolution in the US has already upended energy markets. There is more to come. The market seems to be slowly accepting that the spread between gas and oil will stay wide for the foreseeable future.
In 2010 cars only accounted for about 22m barrels a day out of a global oil market of 87m b/d, to use the size given by Opec, the oil cartel. The rest of the demand comes from trucks (13m b/d), aircraft (5m b/d), ships (4m b/d), railways (2m b/d), petrochemicals (9m b/d), other industrial activity (14m b/d) and power (5m b/d) or heat generation (9m b/d).
Almost all of these sectors are using more and more natural gas, rather than oil. Aviation is an exception, though even here Boeing has a concept aircraft that runs on liquid natural gas and this year Qatar Airways made its first commercial flight running on a blend of conventional jet fuel and an oil-type fuel made from natural gas. In the US the shift is visible in strategies of many companies, from Warren Buffett’s railway BNSF, to UPS and FedEx parcel delivery fleets.
Il y a quelques années quand la théorie du pic pétrolier était à la mode, j’aimais bien dire que le pétrole allait être remplacé par une autre source d’énergie bien avant l’épuisement de cette ressource. Il va sans dire que les tenants de cette théorie devenaient hystériques quand on soulevait cette possibilité. On dirait bien pourtant que le temps est en train de me donner raison…