New study predicts world demand for oil to decrease

by Cornelius Nunev

A recent study forecasts a continued rise in world oil demand. But after 2020, the study claims, that demand will drop dramatically. The study continues to say that by 2035 the demand will be lower than it was last year.

2020 oil peak

The Ricardo Strategic consulting firm is based in England. It estimates that in 2020 there will be an oil demand peak. They believe this will occur due to three factors. This includes there being increased combustion engine technology, additional alternative fuels and increased regulation around the world.

Regulation to increase

All governments seem to be interested in the same thing right now. They are all headed towards more regulation instead of less. The study points to the Corporate Average Gas mileage (CAFE) mandate, which demands all brand new automobiles clock in at 54.5 miles per gallon by 2025.

According to Ricardo, oil consumption will be impacted by hybrid and electric automobiles. The downward slide will have nothing to do with these cars. The study shows other factors.

Improved combustion engines

A far greater impact will come from improved combustion engines. The Ricardo study says that an "evolutionary change in the automotive sector will bring about a revolutionary change in fuel demand." The CAF mandate will make a difference in this technology.

Different fuel types

The agriculture industry will do better with the increasing costs for biomass; Ricardo claims will lessen the demand. Ricardo spoke of this. It said:

"As a result, the study projects that the production of first generation biofuels may increase by 5-6 times over today's levels."

Biomass is made from living organic matter. It is a renewable energy source. It is needed for biofuel. That makes it essential.

Don't forget about natural fuel

Ricardo also points to an increased use of natural gasoline automobiles as a factor in the world's drop of oil usage:

"The improving supply outlook for natural gas ... is likely to drive an increasing disconnect of the gas price from the oil price, encouraging substitution of oil in both stationary and on-road transportation."

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