Peak oil demand is set to arrive sometime between 2030 and 2040, according to a recent Clarkson Research Services report citing a "consensus" of expert opinion. And most visions of the post-peak oil era see energy use transitioning away from fossil fuels to renewable sources.
While the consensus on the starting point of this move away from hydrocarbons may be trending on towards the 2030s, current shifts in public opinion may in fact hasten the arrival of peak oil. Norway offers a case study on changes to the energy landscape wrought by public opinion.
That the next generation of oil and gas would come from the Arctic has been an accepted fact in the industry, but Norway is challenging that assumption. The Norwegian Labour Party recently withdrew its support for drilling and exploration in the Lofoten islands in Norway’s Arctic region, and the shift within the Labour Party did away with a parliamentary majority in favour of exploration in the region.
The change of heart locks in some US$65Bn of oil and gas reserves in the Lofoten region and positions the next battleground for oil and gas exploration in Norway as the Barents Sea. Given current trends against exploration and production, this, too, may be left alone.
In early March, the Norwegian Government Pension Fund announced it plans to sell its shares in oil exploration and production companies, though it will remain invested in what can broadly be called oil companies that are in transition to a more sustainable business model involving renewable energy. The Norwegian Government also plans to ask parliament to double the amount the Norwegian sovereign wealth fund invests in renewable energy projects to US$14Bn, a significant amount even if tiny compared to the fund's US$1Trn in assets.
These changes, happening in spite of the wealth that oil has brought to Norway, are telling. Norway's 5.3M people give it the 119th-largest population in the world, while its US$441.4Bn GDP puts it inside the top 30 in the world, according to IMF statistics. And much of that wealth has been derived from fossil fuels. As recently as 2016, Norway ranked 11th in the world in terms of oil exports – just behind Kazakhstan and ahead of Iran and Qatar – pumping out nearly 1.4M b/d on average.
The prevailing will among Norwegians appears to be making a pronounced shift away from hydrocarbons, towards sustainable energy sources and not just in policy but in practice. Already, Oslo is the electric car capital of the world, and in 2018 the top-selling model of car across Norway was not diesel or petrol-powered, but electric.
Another major source of demand for crude that may plateau or diminish in the post-peak oil future is petrochemicals. Plastics, increasingly wreaking havoc on the marine environment, are now the target of regulators. The EU approved a wide-ranging ban on single-use plastics in late 2018, by a margin of 571-53 MEPs. The ban covers plastic cutlery and plates, cotton buds, straws, drink-stirrers and balloon sticks and MPs tacked on an amendment covering plastic cigarette filters.
The change in the will of the public – and their political representatives – marks a refusal to accept the negative aspects of hydrocarbon energy that may create structural changes in the tanker trade well before peak oil occurs. The most obvious of these structural changes would include a fall in demand for tankers, but direct political intervention in the trade is also a possibility.
Here is one potential example: around this time of year, surplus stocks of US and European winter spec gasoline is sold off cheaply to make space in tank farms, creating an arbitrage in the Australian market. It is a physical arbitrage that involves gasoline being shipped thousands of kilometres for profit, rather than stored for future use. It is a practice that is unlikely to sit well with the will of the people, and I would not be surprised to see politicians impose environmental tariffs to reduce such trades well before the "expert consensus" deadline for peak oil arrives.
News Editor Jamey Bergman contributed to this article