Far from any mountaintop, Hubbert’s Peak is just a point on a curve.
It was supposed to show us where the supply of oil touches its maximum–its peak.
Now though, we need to flip to demand.
M. King Hubbert was a geologist who said in 1956 that our oil supply would peak within 15 years. It would touch the top of its bell curve and then slide from there as the world’s oil wells became exhausted.
Believing price was the evidence, when Brent hit a high of $145.40 a barrel in 2008, many of us expected the peak from which quantity would plunge. But then fracking came along, supply skyrocketed, price plummeted, and we had a new outlook.
That new outlook takes us to peak on the demand side of the market.
To judge if peak is near, we can look at the product, the place, and a mixed message. With the product, it’s the plastics and rubber-related petrochemical feedstock that are up while road transport will tug demand downward. As for where, the divergence is income. The less affluent nations continue to have strong demand.
And finally, as you might expect, the keys to less demand remain EVs and efficiency. Between 2018 and 2022, EV sales popped from 2 million to 10.8 million. Expected to continue, the trend should result in 155 million new EVs by 2028. Also, fuel standard regulations will increase the efficiency of the remaining fuel powered cars.
This graph provides a clue about the probable future of oil demand:
Always though, a graph can hide a phenomenon. Here, it is the continued popularity of SUVs. At 46 percent of global vehicle sales. the SUV remains popular in the U.S., Europe, and India, and somewhat less so in China.
Our Bottom Line: Scarcity
The basic economic problem is scarcity. Defined as finite quantities by economists, scarcity created the need for economics. If everyone cannot have everything, then we need production and distribution systems that decide who gets what. In the United States, the mixture of the market and regulation will decide who-gets-what…
And whether peak demand arrives soon.
My sources and more: Today, all facts came from the 127 page IEA Oil 2023 report. Do take a look at the report. There is so much more than I shared.