Despite the anticipated plateau, BP says the industry will have to keep investing in new oil production to meet growing consumption and account for declining output at legacy fields. The biggest source of demand will continue to be transportation, with consumption for planes and ships growing by 3 million barrels a day and the world’s road fleet guzzling another 2 million barrels a day by 2040.
Most of that demand is seen coming from emerging markets, where the middle class will expand, especially in Asia. For the first part of the next two decades, the U.S., Brazil, Russia and other non-OPEC members will meet most of the world’s growing appetite.
But towards the end of the period, BP sees output declining from U.S. shale fields — the engine of the American oil renaissance — and OPEC reasserting its dominance. The Middle East-dominated group’s production will increase by 4 million barrels a day through 2040, with most of that growth happening after 2030, BP says.
However, BP sees a scenario where low-cost producers like Saudi Arabia, spurred by the looming peak in demand, pump at full throttle, driving down prices and increasing demand for oil.
The picture is more complicated for coal. On the whole, coal consumption would flatline, as China and developed countries quit the fossil fuel in favor of cleaner-burning and renewable energy sources. However, BP sees India and other Asian nations burning more coal to meet surging power demand as the nations become more prosperous.