Exxon To Produce All Of Its Oil Despite Peak Demand Fears
ExxonMobil was forced to finally acknowledge the possibility that future climate change policy could lead to peak oil demand, a serious threat to the company’s operations over the long-term.
In response to a shareholder resolution passed last year, the oil major just released a reportthat recognizes the danger of peak oil demand. By 2040, climate change policies and regulations could cut into oil demand, leading to a drop in consumption by 20 percent.
Under this scenario, oil demand would decline by an average of 0.4 percent per year, with the lower end of the range seeing declines of 1.7 percent per year.
This would mean that global oil demand would decline to 78 million barrels per day (mb/d) by 2040, down from 95 mb/d in 2016. In the most pessimistic scenario (from the oil industry’s perspective), demand drops to 53 mb/d.
It’s a rather bleak picture for oil, and one echoed by a long list of analysts, environmental groups, and increasingly, the oil industry itself. A few weeks ago, a report coauthored by a top BP official, lays out a case in which oil demand peaks and declines, ushering in an era of permanently lower oil prices.
Still, Exxon was clearly issuing the report under duress. The tone of Exxon’s “2°C pathway” scenario suggests that the company doesn’t really see it playing out. While the report suggests that oil demand could fall, Exxon goes to great lengths to downplay the significance, arguing that “[o]il demand is projected to decline modestly on average, and much more slowly than its natural rate of decline from existing producing fields,” and “[e]ven under a 2°C pathway, significant investment will be required in oil and natural gas capacity,” and “[p]roduction from our proved reserves and investment in our resources continue to be needed to meet global requirements,” and the like.
…click on the above link to read the rest of the article…
