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| credit: Adam Brandt, et al* |
The concept of peak oil has been debated by the cognoscenti since 1956 when M. King Hubbard, a geologist working for Shell Oil, coined the phrase. He meant that world production of conventional oil would eventually reach a peak in the sense of the usual bell-shaped commodity supply curve. Now economists are talking about a different "peak" in the commodity's demand curve. This may be wishful thinking, but the idea is that improvements in combustion engine efficiency, price increases and alternative means of locomotion such as electric cars will cause world demand for oil to decrease, not increase. Oil demand in developed countries has been falling since the mid-2000s, according to The Economist. Natural gas in the United States is a quarter the price of gasoline, thanks in part to the shale gas boom, consequently it is replacing oil at the fuel pump and in the petrochemical plant. Compressed or liquefied gas is now in the tanks of trucks, buses and delivery vans. A fifth of America’s buses run on natural gas, as do two out of every five new garbage trucks. Caterpillar and GE, are both working on natural-gas-powered railway trains. TOTE, a shipping company, has ordered the first container ships built to run on liquefied natural gas. McKinsey & Company, an oil and gas industry analyst, predicts that fifty percent of new autos in the US, Europe and China will be electrically driven by 2030. That, and improved plastics recycling and usage will cause peak oil demand to occur sometime around 2030.
One of the key technological developments that will cause peak demand to occur is the improved electric car battery that adequately addresses consumers' "range anxiety". Auto makers are feverishly competing with one another to be the first to produce such a battery. They are getting close to that goal with advances in lithium ion technology. The experts do not all agree when peak oil demand will occur or even if it is a real possibility. They do agree that most growth in oil demand will occur outside of the already wealthy world. Oil is mostly a transport fuel, (60%) and people in wealthy countries are traveling overland less as this chart shows:
*Peak Oil Demand: The Role of Fuel Efficiency and Alternative Fuels in a Global Oil Production Decline, Environmental Science and Technology Letter