A new study predicts that the world’s oil consumption will continue to rise yearly for the next nine years and then drop off sharply. By 2035, the study says, world oil demand will be less than what it was in 2010.
Oil demand to peak in 2020
The England-based Ricardo Strategic Consulting firm’s recent study forecasts an oil demand peak by 2020. The study cites increased regulation worldwide, improved combustion engine technology and the rise of alternative fuels for the predicted trend.
The study says that the governments of the developed world — including the U.S. — are little-by-little enacting regulations that will slow oil consumption in the long run. The study points to the Corporate Average Fuel Economy (CAFE) mandate, which demands all new cars clock in at 54.5 miles per gallon by 2025.
Hybrid and electric cars are welcome and will have an impact on oil consumption, Ricardo says. However, they will not be the deciding factor in the future’s downward slide in demand, according to the study.
Improved combustion engines
A far greater impact will come from improved combustion engines. The Ricardo study says that an “evolutionary change in the automotive sector will bring about a revolutionary change in fuel demand.” This technology, one assumes, will also be driven by the CAFE mandate, at least in the U.S.
Rise of biofuels
Another factor in the lessening oil demand, Ricardo says, is that risings prices for biomass will increase investment in the agricultural industry. Riccardo said:
“As a result, the study projects that the production of first generation biofuels may increase by 5-6 times over today’s levels.”
Biomass is a renewable energy source made from living organic matter. It is the basis of biofuel production.
Natural gas also a factor
Ricardo also points to an increased use of natural gas vehicles as a factor in the world’s decline of oil consumption:
“The improving supply outlook for natural gas … is likely to drive an increasing disconnect of the gas price from the oil price, encouraging substitution of oil in both stationary and on-road transportation.”