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Despite the push for green energy and the impact of the COVID-19 pandemic on commercial transportation, global oil demand is projected to grow through 2030, a new study revealed.
“As much as we all want to successfully deal with the challenge of climate change and as big as the impact COVID has had on oil demand, it is really hard to slow down global oil demand at least over the next 10 years,” said Mark Finley, fellow in energy and global oil at Rice University’s Baker Institute who is also one of the lead authors of the study.
Finley told Hart Energy that global oil demand in three of the four scenarios analyzed in the study continued to grow through 2030. Only one scenario bucked the trend, in which the pandemic’s disruptive impact to the global economy and mobility combined with strong government intervention to accelerate alternative technologies shows an oil demand decline after 2025.
The study, conducted by Columbia University’s Center on Global Energy Policy and the University of California, Davis Institute of Transportation Studies, focused on four scenarios to understand how COVID-19 and other political, economic, social and technological drivers may impact transportation activity and global oil demand. The scenarios—developed by leading energy and transportation experts—featured varying speeds of economic recovery, levels of government intervention in energy markets and endurance of mobility trends that started during pandemic lockdowns.
Interestingly, according to Finley, the study shows that the pandemic wasn’t so bad for oil after all. In fact, some aspects of the COVID experience increased oil use.
For example, there was significant substitution away from mass transit to greater use of personal vehicles, according to the study. There is also some evidence that people left large cities U.S. for the suburbs and smaller cities where there is less mass transit available and people drive more for non-commuting activities.
Further, the study noted a large increase in e-commerce deliveries in the U.S. and other nations that buoyed short-haul truck vehicle miles traveled. “While unrelated to transportation, there was also an increase during COVID in petrochemicals used for personal protection equipment and packaging for take-out food and e-commerce deliveries,” according to the study.
Finley noted that another key takeaway of the study is that both government climate policies and innovation would need to progress at a faster pace to impact oil demand. While uncertainty remains about the world’s recovery from the pandemic, the current state of government climate policies and technology innovation are unlikely to reduce global oil demand fast enough to help the world keep within a 1.5 C temperature rise along the net-zero carbon trajectory.
“Both policy and technology along with consumer behavior need to change much more significantly than we could observe so far,” he said.
“EV’s aren’t going to solve the oil demand challenge by themselves,” he added about electric vehicles (EVs). “We need to do something about petrochemicals, we need to do something about other modes of transportation.”
The study also shows that China and India will see strong growth in oil demand over the next few years.
“There is a need for a global approach to deal with climate change,” Finley continued. “We can’t just focus on U.S., Europe and other rich countries of the world.”
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