The coronavirus pandemic quickened the pace at which mankind is hurtling toward peak oil, some experts say. How can this be with so many former commuters working from home and with air traffic severely down?
It's true that in April 2020, overall U.S. energy consumption dropped 14% compared to the year before. It was the lowest monthly level since 1989, reported the Associated Press. Energy usage around the world dropped too.
In America, "Petroleum consumption fell to 14.7 million barrels a day in April, down almost a third compared to the same period in 2019," wrote Matthew Brown for the AP.
At the same time, though, stay-at-home orders caused an uptick in natural gas consumption, to the tune of 15%. More people at home meant more demand for natural gas as a heating fuel, while relatively few homes are heated with coal or oil, explained Brett Marohl in the Associated Press story. Marohl had helped the U.S. energy administration with research.
As the year drew to a close, with more than 375,000 dead from the virus and widespread unemployment, greenhouse gas emissions had dropped by 10.3%, according to research firm the Rhodium Group. The firm said, "That is the single largest drop in annual emissions in the post–World War II era, outpacing the Great Recession of 2009 when emissions dipped 6.3%."
"Peak oil" defined: Peak oil is the moment of global peak oil extraction; that is, mankind is pumping as much oil out of the earth as we can because there's not any more left, what's left is too expensive to reach, or both. Often confused with oil depletion, peak oil refers to the point of maximum production.
So if petroleum consumption and greenhouse gas emissions are down so much, why do some analysts think we've hurried up the arrival of peak oil? We had to ask:
If We're Using Less Oil Now, Shouldn't We Have More Later?
The analysists who say that Covid-19 has hastened peak oil base their findings on three factors.
- The first factor is that peak crude oil probably already arrived in 2005, according to 2013 findings.
- The second factor is that stay-at-home orders and other pandemic-related reasons why greenhouse gas emissions are down "won't have much of a lasting effect on climate change," says Science News. Most forecasters expect our thirst for oil to bounce back to pre-pandemic levels in just a year or two, and fighting climate change will be just as urgent then.
- Lastly, low demand for oil during the pandemic set oil production back two years while investments in alternative energy grew.
This last point was made by Rystad Energy it its November 2020 report, the result of running actual numbers and projections through three scenarios. Previously, Rystad pointed to 2030 as the year of peak oil, but Covid-19 altered the scenarios in such a way that peak oil in 2028 is the most likely outcome.
“The energy transition is accelerating and also weighs on our peak oil demand revision.”
"The lockdowns will stunt economic recovery in the short-term and in the long-term, and the pandemic will also leave behind a legacy of behavioral changes that will also affect oil use,“ says Artyom Tchen, Senior Oil Markets Analyst at Rystad Energy.
"Supplementing the effect of Covid-19 on oil demand, the energy transition is accelerating and also weighs on our peak oil demand revision," wrote Rystad. "All sectors contribute to the transition, but transport (60% of oil demand) will be the ultimate driver of this shift. By 2025, the plug-in-hybrid and battery electric vehicles (EVs) are expected to achieve 14% market share in new passenger vehicle sales, according to public governmental targets, then further grow to 80% by 2050."
Remember, peak oil refers to the day of maximum extraction, not supply. There could still be a lot more oil in the earth in 2028, but if it's too deep or too remote, it might as well not be there as far as humanity is concerned. We need to extract it at a reasonable cost. Nobody wants a barrel of oil that, because it was so expensive to extract, costs $500. We'd rather use oil substitutes, as Rystad Energy calls them.
Since Covid-19 has stunted oil exploration and production while investments in oil substitutes have charged onward, peak oil really could be here sooner than we thought.