Oil demand is in a slump and it won’t recover any time soon.
In its September Oil Market Report, published Tuesday, the International Energy Agency (IEA) predicted annual demand would contract by a volume equivalent to 8.4 million barrels per day, compared to 2019. That’s steeper than the 8.1 million bpd slump the IEA predicted last month.
“In last month’s report, we said that the market was in a state of ‘delicate re-balancing.’ One month later, the outlook appears even more fragile,” the IEA said, attributing demand disruption mostly to the pandemic. Next year, the IEA expects demand to rebound by 5.5 million bpd but still warns “the path ahead is treacherous.”
The IEA wasn’t the only oil group to make a depressed forecast this week. OPEC revised its forecast for the year down by 400,000 bpd; the cartel now predicts 2020 average demand will slump a total 90.2 million bpd. OPEC revised down its 2021 predictions, too, saying that “structural changes to the global economy are forecast to persist.”
Next on the list: BP. In the British oil and gas giant’s Energy Outlook, published Monday, BP outlines three possible growth scenarios between now and 2050—dubbed Rapid, Net Zero and Business as Usual. In all scenarios, oil demand peaks within the next decade, although the first two scenarios suggest the peak has already come.
While I call these outlooks “depressed,” I mean it only in an economic sense. It’s good that oil demand is waning as the world should be in a rush to wean itself off of fossil fuels. The transition will be disruptive, but the sooner industry leaders recognize the reality of it, the better they can mitigate the economic fallout that will inevitably come.
More below.
Eamon Barrett
eamon.barrett@fortune.com
CARBON COPY
A new climate is emerging in the Arctic, one that is warmer, with snow thawing to rain and glaciers ceding ground to dry land. Arctic sea ice has already retreated 31% since 1979 but the change is now happening so fast modeling the future is increasingly difficult.
President Donald Trump conflated climate with weather, telling a meeting of Californian officials that “it will start getting cooler” soon. For weeks, California has been battling wildfire, which Trump blames on forest mismanagement rather than climate change. A year ago, I argued both were a factor. But Trump's emphasis on forest management doesn’t only ignore climate change, it also ignores the major role the federal government plays in forest services.
Google hasn’t pledged to run on “carbon-free energy” by 2030, as headlines suggest, but it has said it is “aiming” to do so. That’s maybe not as admirable as definitively committing to the target, but the difference is mostly moot since there’s no mechanism to hold Google and other tech giants to their various climate pledges.
Facebook launched a Climate Change Information Center—a content hub intended to provide current and factual information on climate change. The platform is Facebook’s latest belated step to address climate misinformation shared on the social media site. In announcing the hub, Facebook also claimed its global operations will be “100% supported by renewable energy” this year.
IN CASE YOU MISSED IT
Why fighting climate change is key to America’s health by Erika Fry
Wildfire smoke and COVID-19 are a one-two punch for indoor air quality across the U.S. by David Z. Morris
50 years later, Milton Friedman’s shareholder doctrine is dead by Colin Mayer, Leo E. Strine Jr., Jaap Winter
Europe’s leaders want to create a ‘new Bauhaus’ as part of its Green Deal. But what does that even mean? by David Meyer
CLOSING NUMBER
79.6 million tonnes
Wildfires across California have burned 79.6 million tonnes of carbon into the atmosphere this year. Fires in Oregon have emitted 26.8 million tonnes, and those in Washington state have sent up 5.1 million tonnes, according to the EU’s Copernicus Atmosphere Monitoring Service. In total, wildfires across the U.S. have fumed a total 200 million tonnes of CO2 into the atmosphere this year—already 28% more than during the entirety of 2019.
