Platts Analytics sees continued growth in long-term petrochemicals and peak oil demand in 2021. Indeed, many plastics have sustained net positive growth even during the downturn over the past few months.
The International Energy Agency is also skeptical of those writing the obituary for oil demand growth. “If oil demand goes back to 100 million b/d I would not be surprised. And under a strong recovery, I would not be surprised if it went higher than that,” said its head, Fatih Birol, in early July.
Platts Analytics sees oil demand down at 94.2 million barrels a day (b/d) in 2020 (current 97 million b/d) before potentially reaching a post-100 million b/d high in 2021 should the world make a fast and sustained economic recovery.
However, peak oil will also be impacted by assumptions around the long-term price of oil and its alternatives. Petrochemicals growth, plastics in particular, will largely be affected by recycling economics. Then there is the replacement of traditional oil-powered road transport by electric vehicles.
Anyone looking at the demise of crude should look at the case of coal, which remains embedded in the economies of China and India, with over half of the world’s more than 10,000 coal power plants located in the two countries, Platt Analytics said.
Meanwhile global seaborne trade in coal — both thermal for use in power plants and coking used for steel-making — remains strong. Both countries have made commitments to being low carbon economies but it will still take time.
Surprisingly, transportation sector, seen as more resistant to energy transition due to the challenges of running on alternative fuels – airlines and shipping – have been hardest hit and will be the slowest to recover.
S&P Global Platts Analytics’ Scenario Planning Service estimates the most likely scenario to be 3 million b/d removed from oil demand to 2040, with aviation the most impacted sector.
The IEA and IMF have called for $1 trillion in spending to revitalise economies and boost employment while making energy systems cleaner and more resilient under a pandemic recovery plan.
But whether governments can deliver on a greener future by investing in the necessary infrastructure post-coronavirus remains open to debate.