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article imageHas oil industry already crossed the Rubicon of peak demand?

By Karen Graham     Jul 5, 2020 in Business
Although crude prices have rebounded from coronavirus crisis lows, oil execs and experts are starting to ask if the industry has crossed the rubicon of peak demand.
As a consequence of global lockdown measures due to the coronavirus pandemic, the oil industry has been pushed to the edge and into terminal decline. It was hastened by the plunge in the price of crude oil at the start of the pandemic, and even with a few upticks in the price of oil recently, there will most likely be a decline.
The International Energy Agency (IEA) forecast that average daily oil demand will drop by eight million barrels per day this year, a decline of around eight percent from last year.
The IEA does expect there will be a rebound of 5.7 million barrels per day next year, however, with ongoing uncertainty in the aviation industry, the agency still forecasts overall demand will be lower, according to CTV News Canada.
The possibility of oil demand not going back to pre-coronavirus levels is something that many in the industry are now beginning to question. "I don't think we know how this is going to play out. I certainly don't know," BP's new chief executive Bernard Looney said in May.
Musing over the pandemic already being in full swing when most planes were grounded and with white-collar workers giving up the commute to work from home, Looney told The Financial Times, "Could it be peak oil? Possibly. I would not write that off."
Interestingly, the industry has changed its focus from "peak production" with experts forecasting that prices would reach astronomical levels as recoverable oil in the ground runs out - to "peak demand." This was all due to the coronavirus. Not only was fuel demand for the transportation sector curtailed, but the transition to cleaner fuels was given a shot in the arm.
Michael Bradshaw, a professor at Warwick Business School, said environmental groups are already lobbying for a Green New Deal for the recovery, hoping to prevent the Paris agreements from becoming another casualty of the pandemic.
"If they are successful, demand for oil might never return to the peak we saw prior to COVID-19," he said in comments to journalists, reports the Voice of America.
There is still the question of if, and when the transportation industry will recover? "After the pandemic, we might have a different attitude to international air travel or physically going into work," he said.
More about Oil industry, peak demand, 2019 lrvels, Iea, fossil fuel indistry
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