In its annual report on the oil industry, BP outlined potential scenarios for the future of oil and gas. The oil major wrote that the continuous growth of oil demand would end, and oil production might not ever return to pre-coronavirus levels.
The most bullish scenario it outlined still saw demand remain “broadly flat” in the next two decades as the world moves towards lower-carbon energy.
Other oil and gas leaders have said that “peak oil” predictions are exaggerated, so BP’s statement breaks from the norm. BP has made large steps towards cleaner energy, with CEO Bernard Looney saying that he would slash oil and gas output by 40% in the next ten years. He also committed to spending up to $5 bllion per year building up its renewable power business.
The report considered three future scenarios. In the “Rapid” scenario, new policies would lead to a quick increase in carbon prices. The “Net Zero” scenario also sees big shifts in societal behavior. Meanwhile, its “Business as usual” scenario assumes that policies, social preferences, and technology continue evolving at their current pace and trajectory.
In the first two scenarios, “[oil demand] subsequently recovers but never back to pre-covid levels,” wrote Spencer Dale, BP’s chief economist. “…oil demand peaks to 2019.”
It sees oil demand falling for the next three decades, citing the scale and pace of that decline based on growing efficiency and electrification of road transportation.
