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  August 22nd, 2018 | Written by

WATCH: The Future of Oil Demand: Peak, Plateau, or Plummet?

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  • Uncertainty surrounding future levels of oil demand has significant implications for markets and policy.

Projecting oil demand several decades from now is a formidable challenge. Competitively priced alternatives, emerging technologies, policy prerogatives, and societal choices can all have significant impacts on the trajectory of demand over time. Even moderate changes to underlying assumptions in oil demand projections (such as GDP growth) can lead to vastly different outcomes.

In recent years, this range of uncertainty has led to speculation that global oil demand will experience a peak in the not too distant future. Much of the debate on this issue has focused on the potential timing of this peak and some analyses have projected a deep decline in oil demand once this point is reached. Given the magnitude of global oil demand and the variety of combustible and non-combustible uses throughout the economy, it is likely that any peak will first come in the form of a plateau and experience a more gradual rather than precipitous decline thereafter. Moreover, the excessive attention that has been paid to the timing of this decidedly uncertain date appears to miss the broader strategic significance of the issue. That is, the high level of uncertainty surrounding future levels of demand and the increased likelihood that it will begin to level off at some stage in the coming decades has significant implications for both markets and policy.

This CSIS Energy and National Security Program production unpacks the various factors causing such uncertainty for future oil demand and outlines the consequences of a potential peak.