There’s no more suspense over when worldwide oil demand will peak, says nationally renowned economist Elliott Eisenberg. That’s because it already happened in 2019.
Economist Elliott Eisenberg, speaking at the Construction Financial Managers Association’s Trends in Construction Conference on Nov. 19, says oil consumption peaked at 100 million barrels per day and is currently in decline. While that has been happening in most industrialized nations for years, demand is now beginning to plateau in developing countries, according to data provided by ING Global Markets Research.
The annual CFMA conference, held virtually, was co-sponsored by Louisiana Associated General Contractors and Associated Builders and Contractors–Pelican Chapter. Eisenberg was the keynote speaker at this year’s event. “The oil majors are shrinking their footprint in response,” he says. “Shell, BP, TOTAL, Chevron, ExxonMobil … there’s no question about it.” More recently, some 10 U.S. refineries have been or will be idled—including Shell’s Convent Refinery and Calcasieu Refining in Lake Charles—and another 11 worldwide.
Eisenberg’s forecast wasn’t entirely pessimistic. He doesn’t expect natural gas demand to plateau for another 15 years and ethylene capacity will grow by 13% through 2030 as petrochemical owners race to expand U.S. Gulf Coast capacity amid the shale boom.
However, the oil industry will continue to reel from the double whammy of low oil prices and the COVID-19 pandemic, a fact reflected in the steep reductions by major oil players in their capital expenditures and exploration activities. According to Goldman Sachs Group, capital spending by Total, Chevron, Shell, ExxonMobil and BP has been cut by two-thirds since 2014’s precipitous price decline.
The trend can’t be blamed entirely on the pandemic, prices or politics, Eisenberg says. “Four years ago, Donald Trump said he was going to save coal, but economic forces overwhelmed his efforts,” he adds. “Oil is in the same boat. The cost of renewables continues to go down, and it’s now batteries that have become critically important.”
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