The International Energy Agency (IEA), OPEC and the U.S. Energy Information Administration (EIA), have consistently and seriously underestimated U.S. oil production, and hence non-OPEC supply, since the Shale Oil Revolution took off in earnest early this decade.
Forecasters at these major oil organizations simply do not understand that we are in a new age of rapid technological advancement and innovation. This new age has been pushing down the cost of U.S. light tight oil (LTO) faster and lower than expected, expanding ultimate recoverable resource and so-called sweet spots, and pushing U.S. oil production – both crude and NGLs – substantially higher at lower than anticipated prices.
At the same time, this new technological age – the second machine age – is likely to lead to peak oil demand much sooner than predicted by the IEA, OPEC and EIA, with growth in global oil consumption to slow before a precipitous decline thereafter. None of these forecasters are predicting a peak prior to 2040 in their reference cases, although the IEA is at least projecting a significant slowdown in the rate of oil demand growth after 2025.
Land-based transportation currently accounts for almost half of global oil consumption. The internal combustion engine was undeniably the winner of the transportation derby in the 20th century, but it looks like electric vehicles are set to challenge that monopoly in the 21st century given rapid rates of technological…