China dealt a serious political blow to Alberta Premier Danielle Smith in late December when the country’s largest refiner, state-owned Sinopec, released its latest long-term energy forecast. Oil demand is now expected to peak in just a few years, not in 2045 as the Organization of the Petroleum Exporting States (OPEC) has predicted. Sinopec’s announcement calls into question Alberta’s energy strategy, which is based upon growing global oil and gas consumption to 2050.
Smith has been a vocal supporter of the “slow energy transition” narrative promoted by Saudi Arabia and other Middle Eastern oil-producing countries.
At the World Petroleum Congress, hosted in September by Calgary, the Premier lambasted the International Energy Agency (IEA) for forecasting global peak oil demand by 2030. At a September 18 news conference, she accused the IEA of abandoning its 50-year-old role of “doing predictions” and instead indulging in “political advocacy”. Smith praised Saudi leadership in her remarks.
“I feel like we’re going to be in a bit of a technological and innovation race with Saudi Arabia, and I think we heard that from the [Saudi] energy minister this morning,” she told reporters. “He intends to lead the world in this and he is challenging the rest of us to keep up. Alberta wants to keep up.”
Saudi Arabia is the leader of OPEC, the oil cartel that has been cutting production by millions of barrels per day to prop up prices during a softening of the international economy. The organization released its oil forecast a few weeks after the World Petroleum Congress. The report predicts continued growth of oil consumption to a peak of 116 million barrels per day by mid-century, up from 100 million barrels per day in 2022.
But Sinopec’s report estimates that demand will peak at 16 million barrels per day between 2026 and 2030. The China National Petroleum Corporation thinks Chinese gasoline demand will peak in 2025, followed soon after by diesel, and then shrink 2.3 per cent annually until 2030.
One wonders how OPEC’s modellers got it so wrong. And, perhaps more importantly, what other assumptions will prove to be wildly over-optimistic.
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