According to the International Energy Agency (“IEA”) on Monday, Consumption of petroleum is projected to continue to grow for the foreseeable future despite tougher legislation to control vehicle emissions. The forecast of the IEA—a Paris-based energy adviser to industrialized countries—marked a change in tone from its prediction three years ago that oil-demand growth may slow as soon as the end of this decade. The rise of renewable energy sources and cleaner fossil-fuels such as natural gas have led to similar predictions, including Royal Dutch Shell’s forecast last year that rising oil demand could end within five to 15 years. In its annual five-year forecast, the IEA said oil demand from the developing world would keep consumption growing.
“We don’t see a peak in oil demand any time soon,” said Fatih Birol, the IEA’s executive director.
Oil demand will rise in the next five years from an average of 96.6 million barrels a day in 2016, passing the 100 million barrels a day threshold in 2019 and reaching about 104 million barrels by 2022, the IEA said.
Asian countries will use about seven out of every ten extra barrels consumed globally. India’s oil demand growth will outpace China’s by 2022, according to the IEA.
Electric vehicles are a certainly a potential factor to consider in demand for oil, but the IEA predicted that battery-powered automobiles will only displace limited amounts of transportation fuel by 2022.
Demand for crude oil has increased steadily since the end of World War II, as the commodity helped to enable advances in transportation that shaped the modern world. The day that overall demand for oil begins to fall is seen as a seminal event for an energy industry making a long-term transition toward lower-carbon resources.
The IEA sounded an alarm regarding oil supplies. With oil prices depressed for the third straight year, oil-producing countries and companies have made fewer investments. As demand keeps growing, oil-supply growth could falter by 2020 and lead to significant price increases, the IEA said. “Unless investments globally rebound sharply, a new period of price volatility looms on the horizon,” Mr. Birol said.