• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 11 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 7 days The United States produced more crude oil than any nation, at any time.
  • 7 hours Could Someone Give Me Insights on the Future of Renewable Energy?
  • 7 days How Far Have We Really Gotten With Alternative Energy
  • 10 days James Corbett Interviews Irina Slav of OILPRICE.COM - "Burn, Hollywood, Burn!" - The Corbett Report
  • 10 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
U.S. Shale Oil Production Growth Is Slowing Down

U.S. Shale Oil Production Growth Is Slowing Down

When the illusion of unending…

OPEC+ Faces Fork in the Road

OPEC+ Faces Fork in the Road

Some analysts have noted in…

OPEC+ Rules in an Increasingly Tight Oil Market

OPEC+ Rules in an Increasingly Tight Oil Market

The market is growing increasingly…

Alex Kimani

Alex Kimani

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

More Info

Premium Content

ThinkTank: U.S. Should Focus On Lowering Oil Demand, Not Production

  • The Energy Security and Climate Initiative at Brookings has released a new paper arguing that curbing oil demand rather than production is the best strategy to fight climate change.
  • Some climate and environmental experts are saying that Biden should never have been so hell-bent on cutting U.S. production of fossil fuels in the first place.
  • ESCI has hailed the EV transition as one of the more effective ways to lower oil demand.
Barrels

On the path to the presidency, Joe Biden wasn’t one to mince words with regards to his plans for the oil and gas business. When he was on the campaign trail, he vowed not to approve new drilling for oil and gas on federal lands. Indeed, he quickly proved he meant business by suspending new oil and gas leasing and drilling permits on public lands shortly after he ascended into the Oval Office. 

But those were the halcyon days before hard reality, including the aftermath of Covid and Russia’s war in Ukraine, struck. Biden would be forced to go against his core ethos when he famously urged U.S. oil producers to ramp up production amid record crude and gas prices. Democrats were then forced to make a major concession when pushing the IRA bill by including a provision that requires the government to offer specified acreage of federal onshore and offshore holdings for oil and gas leasing in a bid to allow for onshore and offshore renewables development. But that’s not all. Back in March, the Biden administration confounded and infuriated environmentalists after it issued the green light for ConocoPhillips’ (NYSE:COP) long-disputed $8 billion Willow project in Alaska. Activists described the project as a “carbon bomb” and totally incompatible with U.S. climate goals saying it will make it almost impossible for the country to meet its goal to cut C02 emissions in half from 2005 levels by 2030. ConocoPhillips remains the largest producer in Alaska, with extensive holdings in the National Petroleum Reserve-Alaska (NPR-A) and Prudhoe.

But now some climate and environmental experts are saying that Biden should never have been so hell-bent on cutting U.S. production of fossil fuels in the first place. The Energy Security and Climate Initiative at Brookings (ESCI) has released a new paper arguing that curbing oil demand rather than production is the best strategy to fight climate change. The thinktank points out that if the U.S. cut production significantly, other global producers would simply pick up the slack by increasing their production. Meanwhile, the United States would lose energy security while greenhouse gas emissions would simply be shifted to another country. ESCI says that as long as there is oil demand, someone will produce it. For instance, the Tilenga project in Uganda and the Eridu project in Iraq are poised to come online soon, with production capacities of 190,000 and 250,000 barrels of oil per day, respectively, the latter ~40% more than the Willow project. Oil demand has rebounded from pandemic lows, with the International Energy Agency revealing that global oil demand reached an all-time high of 103mn barrels a day in June. According to the global energy watchdog, robust demand was driven by better than expected economic growth in OECD countries, surging oil consumption in China, particularly for petrochemical production and strong summer air travel. Related: Biden Administration’s Offshore Wind Plan Plagued By Soaring Costs

‘‘Pushing for reductions in U.S. oil production is like squeezing a balloon — the production will “pop out” somewhere else,’’ the paper has noted.

ESCI has hailed the EV transition as one of the more effective ways to lower oil demand. The transportation sector is responsible for nearly 60% of global oil demand, with passenger vehicles and trucks guzzling the lion’s share. EV sales are surging thanks to a combination of new compelling models from automakers, improvements in battery technology, policy support and more charging infrastructure. Electrification is also beginning to spread to new segments of road transport.

That said, it’s going to be a long road considering there are only 26 million EVs globally, of 1.4 billion light vehicles. According to BNEF, just over half of passenger cars sold in the U.S. will be electric vehicles by 2030. Forecasts for the penetration of EV by more than a dozen experts see total passenger car sales by 2030 ranging from 11% at the low end to 63% at the high end while projections for 2050 range from 31% to nearly 100%. In carbon constrained forecasts, BNEF has predicted that passenger vehicle oil demand will fall from about 25 million barrels per day today to 3–6 million barrels per day by 2050. However, most other forecasts are much less bearish and see passenger vehicle oil demand clocking in at 10 million to 20 million barrels per day by 2050.

Finally, the recent move by the EU to move to green aviation fuels might also play a big role in lowering emissions considering the global aviation industry consumes ~15% of global oil production. On Wednesday, EU lawmakers approved new rules that require at least 2% of jet fuel used by airlines to be sustainable as of 2025, with that share to increase every five years to hit 70% by 2050. Wider adoption of such measures could prove decisive in the fight against climate change. However, it’s likely to come at a heavy price with a large proportion of travelers likely to be priced out due to the high cost of sustainable aviation fuels.

By Alex Kimani for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment
  • DoRight Deikins on September 17 2023 said:
    Wow, those people at ESCI/Brookings are really smart! Reducing demand, rather than reducing supply - who would have thought it.

    Unfortunately, the game is still up for grabs as to whether the EVs really do use that much less fossil energy than ICEs over their lifetimes. Most certainly they do in the mid-course, using much less (unless the cost of all the fossil fuel that produces that electricity and electrical infrastructure is counted in). The statistics I've seen show the upfront cost for building a EV is much higher than a ICE. But don't take my word for it, ask Ford. Do you think that fancy EV you're driving will get a very good price 10 years down the road, when you count in the cost of supplying new batteries?

    And the cost of those solar panels and wind turbines is dropping, so they say, at least unless you're Orsted or Siemens. But what do they know?
  • Mamdouh Salameh on September 17 2023 said:
    The thrust of the US Think Tank’s argument is, in theory, correct. But in practice, it has no leg to stand on for the following reasons.

    1- The notions of global energy transition to renewables and net-zero emissions are myths. Even a partial transition can’t succeed without huge contributions of natural gas, coal and nuclear power. Therefore, net-zero emissions could never be achieved in 2050 or 2100 or ever.

    2- Renewables are incapable on their own of satisfying the global demand for electricity because of their intermittent nature. Current technology won’t allow us yet to store solar power in summer for use in winter.

    3- The global transport system currently accounts for an estimated 73% of global oil consumption. Yet despite more than 35 years of heavy government subsidies, daily media promotions of EVs and mandatory government legislations, the number of EVs on the roads is only 26 million compared with 1.4 bn internal combustion engines (ICEs). The 26 million EVs have only managed to displace 1.4 million barrels a day (mbd) or 1.86%.By 2030, the number of EVs would have risen to 40 million and assuming that ICEs remained 1.4 bn (an impossibility) and with global oil demand rising to 107 million barrels a day (mbd) by then of which 73% will be consumed by global transport, the 40 million EVs will only displace 2.23 mbd or 810,000 b/d or 2.85%.

    Oil is here to stay and along with natural gas will continue to drive the global economy throughout the 21st century and probably far beyond.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • jack Prong on September 17 2023 said:
    Totally worthless advice. Drill, baby, drill.
  • Mamdouh Salameh on September 18 2023 said:
    The thrust of the US Think Tank’s argument is, in theory, correct. But in practice, it has no leg to stand on for the following reasons.

    1- The notions of global energy transition to renewables and net-zero emissions are myths. Even a partial transition can’t succeed without huge contributions of natural gas, coal and nuclear power. Therefore, net-zero emissions could never be achieved in 2050 or 2100 or ever.

    2- Renewables are incapable on their own of satisfying the global demand for electricity because of their intermittent nature. Current technology won’t allow us yet to store solar power in summer for use in winter.

    3- The global transport system currently accounts for an estimated 73% of global oil consumption. Yet despite more than 35 years of heavy government subsidies, daily media promotions of EVs and mandatory government legislations, the number of EVs on the roads is only 26 million compared with 1.4 bn internal combustion engines (ICEs). The 26 million EVs have only managed to displace 1.4 million barrels a day (mbd) or 1.86%.By 2030, the number of EVs would have risen to 40 million and assuming that ICEs remained 1.4 bn (an impossibility) and with global oil demand rising to 107 million barrels a day (mbd) by then of which 73% will be consumed by global transport, the 40 million EVs will only displace 2.23 mbd or or 2.85%.

    Oil is here to stay and along with natural gas will continue to drive the global economy throughout the 21st century and probably far beyond.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • George Doolittle on September 18 2023 said:
    There is not pure BEV product available as mass produced on the US Market now? Of course there is. Long Rivian and Lucid strong buy.
  • Levi Russell on September 20 2023 said:
    It should be clearer than ever that the purpose of "green" policies is to impoverish us.

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News