Peak Oil Demand Could Have Serious Consequences For Energy Security

Peak Oil Demand Could Have Serious Consequences For Energy Security

Motorists line up for gas on the first day of gas rationing imposed on nine California counties ... [+] following the 1979 revolution in Iran that caused a shortage of crude oil. In the past couple of years, arguments and predictions have abounded to the effect that climate change policies and technological advances will lead to a peak in oil demand, possibly in the near future. While some of these predictions are based on aggressive assumptions about the adoption of electric vehicles, others are more prescriptive, suggesting what must be done to accomplish greenhouse gas reduction goals. Foremost among these has been the IEA's NetZero2050 Scenario, which suggests that all new upstream investment by the oil industry needs to stop, and existing production allowed to decline naturally. Additionally, pressure from activist investors on the oil industry (among others) might curtail both companies' desire to invest in production but also discourage the financial sector from providing needed capital. Further, the possibility that oil prices would fall with falling demand will mean that the more expensive supply, such as U. S. shale oil, will become uneconomic. The figure below shows how the IEA projects that in its NetZero2050 Scenario, the oil price