Oil supply will outpace demand

The world’s oil supply may reach a peak in the next few years, but this will be caused by a decline in demand for gasoline, rather than lack of supply, a BP economist claimed on Wednesday.

These comments came in the wake of statements from other oil industry officials, who recently have been questioning mainstream oil supply forecasts, and have suggested a peak in output may be coming sooner than industry analysts had previously admitted.

BP’s Economic Advisor Peter Davies at a meeting in parliament, arranged by a group of lawmakers enquiring into peak oil, said: “I believe there is a realistic possibility that world oil production will peak within the next generation as a result of peaking demand,”

A rally in oil prices in the last few days, after hitting a record high of above $100 a barrel earlier this month, is leading to increasing interest in peak oil. The view that supply has, or will soon reach, a final high point, and then fall off.

BP is the world’s third largest oil company, by market value. They dismissed the contention that there is a problem with the amount of oil still available to be drilled.

BP has assessed statistics, which show oil reserves of 1.2 trillion barrels worldwide, enough to sustain current usage, for around forty years.

Davies further stated: “environmental regulations, including efforts to reduce greenhouse gas emissions, could cause consumers to move away from oil”.

And that “I think we will run out of demand before we run out of supply. There’s a distinct possibility that global oil consumption could peak as a result of climate policies.”

Furthermore: “An imminent peak in oil production is not likely,” Davies said. “Valid concerns remain over investment, especially in resource-rich regions.”

Davies also said: “it was possible to boost world oil production to 100 million barrels per day, a rate, senior figures, such as the chief executive of French oil company Total, have questioned in recent months.”

Worldwide we are expected to require more than 100 million bpd of oil later this century, according to the latest forecasts from the International Energy Agency, which would be an increase from about 86 million bpd now

“I believe 100 million barrels per day is achievable,” Davies claimed: “This is achievable in resource terms but it does come down to how much investment is going to take place.”