Peak demand has been on the oil industry’s radar for some time but mainly as a distant event with vague implications. BP tried to change that last month with a bearish long-term forecast for oil demand that said peak demand is either here now or will arrive in the next few years.
The UK oil major has made a cottage industry of its long-term Energy Outlook, which is eagerly awaited by oil and gas companies for its insights about future supply-demand trends. However, the overall response this time from most in the industry was that BP jumped the shark.
It’s true that the Covid-19 pandemic has stunted oil demand — and continues to do so — but to suggest that the market won’t recover to its pre-virus growth trajectory is quite a leap. One only has to look at BP’s new business strategy to see what is more likely driving the forecast.
Along with several of its European peers, BP aspires to “net-zero” carbon emissions by 2050 and plans to shift investment away from its core oil and gas operations to low-carbon and renewable energy projects in the coming years.
Under its plan to become an “integrated energy company,” BP will boost its low-carbon spending to $5 billion annually by 2030 while reducing oil and gas production by at least 1 million barrels of oil equivalent per day from 2019 levels. That