For years, meaning until the arrival of U.S. shale production, much ink was spilled on the concept of "peak oil" -- the argument that the world was fast approaching an absolute maximum of crude oil that can be produced on a daily basis. Shale production has put the kabosh on that for the time being, but there's another "peak" to argue about, and it's peak demand. Oil consumption in Western Europe, Japan and the United States has been declining since about 2005. Have we hit "peak demand?"
Not hardly, at least not worldwide, agreed three panelists at the ongoing IHS/CERAWeek energy conference in Houston. Demand from Asia and the developing world will more than offset declines in OECD nations, said the panelists, all refiners. Bill Klesse, CEO of San Antonio-based Valero Energy, said world crude oil demand can be expected to grow about 1 million barrels per year through 2025. That will take world demand from about 90 million barrels a day to between 105 million and 110 million barrels a day by then. "We expect this business to be 15 to 20 percent larger," said Klesse, who heads the world's largest independent refiner. Abdallah Al-Saadan, of Saudi Aramco, said there will be two billion additional people on the planet by 2050, mostly in developing economies, and most will enjoy a higher standard of living that their countrymen do today, promising higher consumption even with improved energy efficiency and the development of renewables. Completing the trifecta, Philip Rinaldi, CEO of Philadelphia Energy Solutions, said energy-efficiency will trim U.S. demand, but the rest of the world is growing. We may have seen peak demand when it comes to gasoline for our vehicles, but there will be plenty of other uses that work to boost overall consumption, Rinaldi said. Philadelphia Energy Solutions bought two former Sunoco refineries and now processes about 350,000 barrels of crude oil daily.
-- Jim Fuquay