French energy giant Total SE (formerly Total S.A.) spread more doom and gloom into the oil markets today, foretelling of the oil industry's ultimate horror—peak oil demand.
In its Energy Outlook report published on Tuesday, according to Bloomberg, Total SE sees total global energy demand increasing in every scenario it ran—but according to Total, this will not help the oil industry. Instead, Total is attributing most of this energy demand increase to low-carbon power.
As such, oil demand growth, according to Total SE will end in a decade, in 2030.
Total's is a more temperate analysis than peer BP's, which thinks that oil demand growth has already peaked. Still, the forecast is troubling for the oil industry and piggybacks other grim forecasts as well, including the IEA's and OPEC's.
Total's outlook for natural gas wasn't as grim, with the lower-carbon intensive product catering to calls for a greener future.
Oil prices soured nearly 4% on Tuesday afternoon in part due to an uptick in the number of new coronavirus cases reported around the globe, and in part due to mounting fears that oil demand growth will never snap back even post-Covid 19. It is this constant fear of demand growth that is continuing to pressure prices and has kept them rangebound for months. The final price pressure comes from Libya, who is ramping up production after long port blockades. Related: Oil And Natural Gas Prices Slide As Traders Grow Cautious
At 3:00pm, WTI was trading at $39.12, once again down below $40 per barrel.
In separate news, Total also announced this week that it was committing to biodiversity, agreeing, among other things, not to conduct oil and gas exploration or extraction operations in UNESCO World Natural Heritage sites.
Total SE's (NYSE:TOT) stock price fell $0.31 on Tuesday by 0.92%.
By Julianne Geiger for Oilprice.com
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Net zero emission is inevitable. It might not happen over night but the revolution has started. The younger generation will be the key driver. They are the future consumers and they wanted the world without oil. So it’s up to oil companies to adapt to the new reality.
With the global economy destined to continue growing to feed almost 8 bn people on earth, there could neither be a post-oil era nor a peak oil demand throughout the 21st century and probably far beyond. Global oil demand will have to continue growing to enable the global economy to grow also and feed the world’s growing population. The alternative is a return to pre-industrial age and the destruction of the world’s forests thus causing a disaster probably far bigger than the current climate change.
Environmental activists and divestment campaigners have to accept that an imminent global energy transition from oil and gas to renewables and also zero emission are illusions. They better understand that transition is already happening in a gradual way. Furthermore, we are already witnessing the demise of the biggest polluter: coal. With time global electricity will be totally generated by renewable and nuclear energy. Global transport and petrochemicals are a different story altogether.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London