Press releaseRelease date: 14 July 2011
As concerns regarding climate change, energy security and oil price volatility – alongside ongoing advances in low carbon technologies – collectively appear set to weigh down on demand for oil, the world will arguably move towards a paradigm of ‘Peak Oil Demand’ before the ‘Peak Oil Supply’ that has long been forecast. In a landmark multi-client research study, Ricardo Strategic Consulting and Kevin J. Lindemer LLC aim to assess the impact of these powerful policy drivers on the future trajectory of oil demand, identify the likely tipping point when demand will start to turn down, and address the implications for energy producers, users, regulators and governments as the world starts beating its addiction to oil.Proponents of the concept of ‘peak oil’ have long argued that the world faces a situation – possibly very soon – in which its capacity to produce oil hits a ceiling, with demand subsequently having to adjust as supply begins to decline and alternatives to oil move into the market to fill the gap. Driven by a number of growing concerns including the increasingly worrying geopolitics of oil, governments and industry are investing heavily to accelerate the development of low carbon technologies that aim to reduce, replace or obviate the use of fossil fuels in the energy mix. With around half of global oil demand dependent on the internal combustion engine, radical technology change in the automotive sector, an area in which Ricardo possesses world-renowned expertise, will be of particular significance. But what will happen to oil demand as these efforts begin to bear fruit, and what are the implications for key sectors of the fuel production and processing, power generation, construction, mining, automotive and transportation industries and the investment community?The study to be carried out by Ricardo Strategic Consulting and Kevin J. Lindemer LLC will consider , among other things, the effects of new technologies on both the supply of and the demand for oil, the emphasis increasingly placed upon energy security, and consumption patterns driven by both usage profiles and emerging demographic changes in key markets such as China. Although they are extremely diverse, it is unlikely that any of these factors will diminish in their influence on the energy market within the 10-20 year time horizon of the study. In oil, as in other commodities, demand responses to higher prices and to policy initiatives are typically asymmetric; many of the driving forces that are now beginning to act against future oil demand growth will not reverse, and others will not fully reverse even if oil prices should fall back. In short, while the continuation of world economic growth will certainly translate into an increasing demand for energy, we are likely to see significant changes in the way in which that energy is produced and delivered, with a reducing dependency on oil a key, and perhaps surprising, feature of this energy transition. Commenting on the announcement of this landmark project, Peter Hughes, Ricardo Strategic Consulting director and head of the Energy Practice, said: “Over the last few years a near ‘perfect storm’ for peak oil demand has been forming and gathering strength. The drivers working against oil demand growth are increasing in number and intensity while those drivers supporting future oil demand growth are either stable or declining in influence. The study that we are about to embark upon will be of keen interest to actors within the oil and gas supply chain from exploration to distribution, as well as governments, regulators, NGOs, the transportation sector and the power generation industry. With a peak in oil demand now in real prospect within the longer-term planning horizons of many organizations, we would suggest that there is an increasingly compelling case for the implications of such a scenario to be incorporated into strategic thought processes.” The significance of this study is reflected in the list of highly influential companies and organizations that are already enrolled as participants, including OPEC, BHP Billiton, Statoil, Maersk, Lubrizol, Infineum and Fluor Corporation. The ground-breaking analysis and results of the study will be shared with all such participants in a series of interactive workshops. Further expressions of interest from those wishing to participate in the study should be directed to Sarah Crombie at Ricardo Strategic Consulting (firstname.lastname@example.org) as soon as possible.
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