Many oil industry analysts have openly questioned whether global demand for fossil fuels will ever reach its pre-pandemic highs. Notably, oil major BP (NYSE:BP) sees demand declining over the next 30 years, and suggests it may have already peaked.
Not so fast, says OPEC. The analytical arm of the oil cartel released a report on Thursday that anticipates oil consumption will grow for at least the next 20 years.
Obviously, world oil consumption is either going to increase or decrease; it can't do both. So who's right?
OPEC points to a growing world population as one of the primary drivers of oil consumption. It also believes that the current global oversupply and resulting low prices will make oil-based fuels a financially appealing option. Lastly, it assumes that the coronavirus pandemic will largely be resolved by mid-2021, and that demand will immediately start rising once it's in the rearview mirror. "Oil will be needed for years to come," the report concludes.
Other analysts aren't so sure. In a pre-pandemic analysis, the International Energy Agency suggested that oil demand would stop rising in the 2030s. But since then, demand has fallen sharply. Working from home is now seen as a viable option for many jobs, and some in the passenger aviation industry predict it may take up to 20 years for demand to return to prior levels.
Even in its most favorable scenario for the oil industry, BP still predicts that fossil fuel demand from on-road vehicles will decline, with demand being shouldered by planes, trains, and ships. Under its other scenarios, oil demand could decline by as much as 50% by 2050.
Who's right? Only time will tell.