Sopuruchi Onwuka
Earlier predictions by the International Energy Agency (IEA) and similar analysts that oil and gas demand was crumbling under the weight of global campaign for energy transition and climate action are now facing a review to adjust them to prevailing reality of petroleum resilience in the energy market.
Oracle Intelligence reports that the IEA which monitors the market for the Organization Economic Cooperation and Development (OECD) has led the prediction that petroleum energy would reach peak demand by 2030 after which it begins to cede market to cleaner energy options.
The IEA predictions are significant because they hold immense potential for shaping policies by the OECD which host the world’s most industrialized nations mostly in Europe and America. And other forecasters normally plug into IEA’s assumptions, pushing narratives that new energy options and imminent shift in demand would lead to stranded petroleum reserves when producers lose market.
The earlier predictions of how quickly oil would be abandoned by global energy market had led to drastic shift in the investment community towards low carbon energy portfolios. The forecasts also influenced policy deadlines on switch to electric vehicles in Europe and led to financing freeze on fossil fuel development by international lenders controlled by Western governments and institutions.
However, the predicted decline in petroleum demand has failed to indicate by 2025, shaking the reliability of the forecasts. And the IEA is working on a new prediction which extends peak oil by as long as another 25 years into the future.
The new draft which is already public admits that both oil and gas demand are set to continue growing for decades.
Sources reviewed by Oracle Intelligence showed that a draft of the IEA report, World Energy Outlook, now hinges future Peak Oil predictions on full delivery of global climate policy. The agency now supports its predictions with Stated Policies Scenario, or STEPS, in replacement for Current Policy Scenario.
The changes in terms and conditions for prediction reflect a major shift in forecast methodology that paints the scenarios under which expected changes would come into effect.
A report on the emerging shift in Peak Oil prediction published by OilPrice noted that “the IEA then introduced another scenario that was favorable to transition technology but distant from factual reality,”writing that the Announced Pledges Scenario “assumed that all the energy and climate policies, plus political aspirations, were met in full and on time.”
The report pointed at repeated revision of oil demand projections by the IEA. It pointed out that in its Road Map to Net Zeroreleased in 2021, the IEA had assumed that no new oil and gas exploration would be necessary beyond that year but had to reverse itself and called for more exploration later when oil supply tightened, and prices rose.