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What Does The Future Look Like For Oil & Gas?
Irina Slav

Predicting how an industry will look 20 or more years from now is always a challenge. There are always unforeseen factors that have potential powers of disruption that could throw any forecast out the window, and that’s why long-term forecasts tend to be generally vague. Unless they’re about oil and gas.

When it comes to oil and gas, there are two schools of long-term forecasting thought, and these two schools are at odds with each other. One school—the transition school—argues that the electrification of transport and the transformation of electricity generation will ultimately lead to the demise of oil and gas as commodities underpinning the global economy.

The other school—the fossil fuels are forever school—argues that the current approach to the electrification of transport and the transformation of energy generation could never work the way they are intended to work because of the laws of physics. And because of that, oil and gas still have decades of demand in them.

Transport has been electrifying quite fast over the past couple of years, overwhelmingly in the passenger car segment, with EVs coming to account for increasingly solid portions of total car sales in certain places such as the UK, the EU, and California. What this hasn’t done, however, is affect the demand for oil.

Demand for oil, in fact, has been on a steady rise for decades, despite temporary dips like the one we saw in 2020 during the pandemic lockdowns. That year, BP predicted that oil demand would never return to 2019 levels. It assumed that oil demand had peaked. And it was wrong. Related: Guyana To Pump 1.2 Million Barrels Of Oil Per Day By 2027

This year, according to the International Energy Agency, global oil demand is set to hit a record high of almost 102 million barrels daily. That’s despite all the EV sales and the massive buildout of non-fossil fuel electricity generation capacity. 

The IEA doesn’t often do long-term forecasts, but when it does, they are in sync with BP’s forecasts: the energy transition should reduce demand for oil and gas substantially. No one knows if it actually will, but it should, goes the IEA’s tune.

Other forecasters are bolder, phrasing their forecasts as a certainty. BloombergNEF is one of them. The firm regularly forecasts a bright future for EVs and provides the data to support it. So do other forecasting entities that see the transition away from fossil fuels as the only future for humanity.

The oil and gas industry, on the other hand, has a different view. This view is naturally informed by the industry’s business, but this does not mean it has no grounding in reality, again because of that industry’s business.

The industry—and OPEC—tend to focus on the world’s demand for energy rather than clean energy specifically. Their argument can be summed up simply as follows: most people need energy. They need it at all times and it is their first priority that they receive this energy. Where it comes from and how clean it is, is a secondary concern for the majority of the world’s population.

Whatever objections one has to the oil and gas industry, it would be difficult to oppose this argument simply because it reflects actual, material reality. Exxon, for instance, in its recent long-term energy outlook, said that it expected global energy demand to rise by 15 percent between now and 2050.

Noting that developed countries will improve the efficiency of their energy use over the next couple of decades, Exxon went on to note that “developing countries, which represent 80% of the world’s population, will use more energy as they pursue better living standards.”

Like BP, which expects oil and gas to fall sharply by 2050, Exxon also sees the share of these fossil fuels declining substantially by that year, driven out by the momentum of the transition. However, these forecasts are heavily conditional on one thing: the transition working out as planned. And it is already not working out as planned.

Developing countries may be building some wind and solar capacity, but their main bet remains on fossil fuels, including coal. China, the poster child of wind and solar with its massive capacity, is building coal power plants galore while Europe and the U.S. shut down theirs. And for all the trillions invested in renewable energy capacity—$1 trillion in 2022 alone—the share of oil and gas in the global energy mix has only moved down by a couple of percentage points, if that.

Meanwhile, people like Aramco’s chief executive are warning that not enough is being invested in future oil and gas supply. In other words, we might begin to run out of oil and gas supply before demand begins to go down. 

From a certain perspective, this would only facilitate the transition away from fossil fuels because with limited supply, these would become less affordable. The problem is that alternatives are also becoming less affordable because of the limited supply of raw material inputs.

The ultimate question for our future might well be what’s less expensive. Some believe they know the answer, and it’s “wind and solar”. Others, with some knowledge of the mining industry and geopolitics, would beg to differ. Only time will tell who’s right.

By Irina Slav for





Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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