OPEC is highly bullish on long-term oil demand growth. Not everyone agrees
The sun sets beyond crude oil storage tanks at the Juaymah tank farm at Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Ras Tanura, Saudi Arabia, on Monday, Oct. 1, 2018.
Bloomberg | Bloomberg | Getty Images
Global benchmark Brent crude falling below $70 a barrel in early September — its lowest in 33 months — is terrific news for consumers, who will consequently see lower prices at the pump.
It’s also the stuff of nightmares for OPEC+, for whom oil revenues are critical.
The oil producer alliance led by Saudi Arabia earlier this month decided to delay oil production hikes for two additional months in an effort to shore up prices, but so far to no avail. Low global demand forecasts, coupled with new oil supply coming from non-OPEC countries, spell a long period of subdued crude prices.
It’s led some in the market to ask the question: Have we officially reached “peak oil”? Has demand growth hit its apex, and is it just downhill from here?
By the forecasts of OPEC itself, that’s a hard no.
The oil producer group’s 2024 World Oil Outlook report, released Tuesday, predicts strong energy demand growth of 24% globally between now and 2050. It also forecasts “robust medium-term growth” in oil demand reaching 112.3 million barrels per day in 2029, an increase of 10.1 million barrels per day compared to 2023.
A fair number of energy analysts appear to disagree with that calculation — not least those at the International Energy Agency. The Paris-based agency sees demand actually leveling off by the end of the decade to around 106 million barrels per day, according to its annual mid-term outlook published in June. The IEA still sees global oil demand rising; it just forecasts a smaller rise, and expects it to peak by the end of the decade.
The battle of the forecasts between OPEC and the IEA has gained publicity in recent years, with the latter organization pushing hard for a net-zero future.
S&P Global Commodity Insights, meanwhile, sees the medium-term future as somewhere in between, with demand reaching a peak of 109 million barrels per day in 2034 and gradually declining to fall below 100 million barrels per day in 2050.
OPEC, by contrast, sees demand hitting a whopping 120 million barrels per day by 2050.
All parties agree that demand will fall in the developing world, while rising in emerging markets led by India.
The medium-term outlook
As for the near-to-medium term outlook, analysts are bearish on oil demand and prices. This is despite the early September announcement by OPEC+ that the group would be extending its crude production cuts into December in an attempt to limit market supply.
“That two month extra time hasn’t convinced anybody who’s skeptical about the market that that’s going to do much to shore up prices,” Dave Ernsberger, head of market reporting at S&P Global Commodity Insights, told CNBC.
“So that’s the in-the-moment issue. But the much bigger issue is, existentially speaking, are we moving past the moment of peak oil demand?”
Ernsberger pointed to the growth of alternative energy forms, including the increasing use of biofuels in the maritime industry.
“What we’re moving into is an era of post-demand growth. It’s not a post-oil moment, but it’s a post-growth moment. And how does OPEC+, how does the market readjust to a world of low or no growth in demand overall?”
Price increase prospects are also dimmed by China, the world’s largest oil importer, which has put itself on a dedicated path to electrification.
“The biggest threats to higher prices for OPEC+ are external,” Li-Chen Sim, a non-resident scholar at the Washington-based Middle East Institute, told CNBC.
Those are chiefly “lackluster demand, especially from China, oil supply from non-OPEC+ sources, and internal; some members are producing more than assigned quotas.”
Estimates by international and Chinese sources show a slowing demand for oil and refined products in China, Sim said.
That is in part due to slowing Chinese economic growth of around 3% to 5% annually in recent years — still better than many other countries, she noted.
“But there’s also a structural element to the reduction in oil consumption, driven by a conscious effort to reduce its high dependence on oil (and gas) imports, and expressed in policies such as electric vehicle uptake and encouraging expansion of renewable and nuclear power,” Sim added.
In the near term, OPEC+ is still expected to bring some production back in December, several countries in the alliance are producing beyond their quotas, and more supply is coming onto the market from non-OPEC+ producers like the U.S., Guyana, Brazil, and Canada.
“It’s difficult to see prices moving much higher from here as long as that threat is out there in the market to bring those supplies back,” Ernsberger said.
In the much longer term, the eventual decline of the oil era – if it happens – will be brought on due to changing demand rather than dwindling supply, many analysts argue.
It was the late Saudi Sheikh Ahmed Zaki Yamani who said in 2000: “The Stone Age came to an end not for a lack of stones and the Oil Age will end, but not for a lack of oil.”
Volkswagen is advertising its 2024 ID.4 Standard at $999 down, $149/month for 24 months. That’s an average monthly lease cost of just $184/month plus tax and license, making it the cheapest of all January EV lease offers we’ve found.
We haven’t seen a great lease deal like this on a five-passenger electric SUV since last April, when Toyota slashed the average lease cost of its bZ4X XLE down to $191/month for 2023 model and $227/month for a 2024 model. In-stock bZ4X inventories were depleted in a few weeks, and dealers subsequently started to hike their asking prices as they collected deposits for ordered and in-transit vehicles. It stands to reason that the same phenomena could occur with this incredible ID.4 lease offer, so act quickly if you’re intrigued by this deal.
Equipped with a 62kWh battery and a single motor that drives the rear wheels, the ID.4 in Standard trim (MSRP $41,160) can travel 206 miles on a full charge and achieve 60mph from standstill in 7.3 seconds. Consumers that require more range or performance can opt for an array of higher trim levels, ranging from the ID.4 Pro RWD (291 miles, 0-60mph in 6.1 seconds, MSRP $46,300) to the top-of-the-line fully-equipped ID.4. Pro S AWD (263 miles, 0-60mph in 4.6 seconds, MSRP $55,300).
For those that prefer to buy rather than lease, Volkswagen is running a $10,500 Retail Customer Bonus Cash incentive on the ID.4 which means that the ID.4 Standard can be bought for just $30,660.
As far as dealer offers, a quick survey of a few VW dealers shows that VW of Thousand Oaks in southern California, VW of West Islip in New York and King VW in Maryland have dealer discounts of about $2000 that should stack on top of manufacturer incentives to lower the monthly cost of a lease or reduce the final price on a purchase.
We can help you find a great deal on an in-stock Volkswagen ID.4. Also, check our Electric Vehicle Price Guide and Electric Vehicle Lease Guide over the next week or two as we find the best dealer offers on EVs in the US.
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Hamburger Hochbahn AG operates the city of Hamburg’s bus system, and they’ve just placed an order with Daimler Buses for 350 fully electric Mercedes-Benz eCitaro buses to be delivered to the northern German city for use as zero-emission public transport.
Hamburger Hochbahn AG becomes the latest bus operator to put in a major order with Daimler – as I type this, fully 95 examples of the Mercedes-Benz eCitaro electric buse have already been deployed on the streets of Hamburg through Vhh.mobility, with both Mercedes and Vhh.mobility calling the bus fleet’s arrival a major step towards CO2-neutral local transport.
“I am very pleased that, together with vhh.mobility, we can make a significant contribution to emission-free local transport in the Hamburg metropolitan region,” says Till Oberwörder, CEO of Daimler Buses. “Our battery-electric eCitaro city bus offers an excellent overall package: The modern, long-range electric drive ensures that passengers reach their destinations quietly and locally CO2-neutrally. Advanced assistance systems also increase safety in all road traffic conditions.”
When discussing their order, Hamburger Hochbahn AG representatives said they were particularly impressed by the low total cost of ownership (TCO) and the ease of maintenance offered by the Mercedes eCitaro electric bus over its service life.
The Mercedes eCitaro buses ship with 98 kWh battery packs, configured in either 294, 392, 490, or 588 kWh specifications, depending on what’s needed by the bus operator. Hamburger Hochbahn AG plans to convert its entire fleet to emission-free drive systems by 2030, and the company goes to great efforts to ensure that 100% of the energy it uses to charge those vehicles comes from sustainable and truly “green” sources.
Electrek’s Take
Replacing diesels with electric vehicles in heavily populated areas has solid, observable, measurable benefits – not just in terms of cost, but in terms of reducing surface-level air pollution and improving overall quality of life. There’s absolutely no way to continue to justify the use of diesel in urban transit, and it’s great to see that Hamburg agrees.
SOURCE | IMAGES: Daimler Trucks, via Power Progress.
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Electric equipment from XCMG can now be ordered with interchangeable battery swap tech, enabling heavy trucks and construction equipment to swap out their BYD-developed, 400 kWh battery packs in just three minutes, and top-off as quickly as diesel.
Xuzhou Construction Machinery Group Co., Ltd. (XCMG, for short) may not be a household name here in the US, but the Chinese multinational is the third largest manufacturer of construction machinery in the world – and, with the launch of a full line of heavy equipment featuring battery-swap technology, they’re making a case for becoming the number 1 HDEV manufacturer sooner than later.
And we’re not just talking about off-highway and heavy equipment – the XCMG’s swappable BYD batteries are making their way to on-road trucks as well … but we’ll get to that.
XCMG ZNK95 electric autonomous haul truck
XCMG showed off its latest electric equipment at last month’s Bauma China show, including an updated version of its of its 85-ton autonomous electric mining truck. Known as the ZNK95 (above), the truck features a fully cab-less design – meaning there isn’t even a place for an operator to sit, let alone operate. That’s too bad, too, because what operator wouldn’t want to experience a dedicated permanent magnet synchronous electric drive system capable of putting out 800 kW (1070 hp) and 22,000 Nm (16,200 lb-ft) of torque?
But autonomous solutions aren’t about hp and torque – they’re about keeping operators out of extreme and dangerouns environments. To that end, XCMG says its new HDEVs are fully capable of operating in high-altitude, extremely cold environments with temperatures as low as -40°C (a temp. that most diesels wouldn’t be able to start at, let alone run).
Even in those extreme climates, the XCMG gets the job done with an autonomous driving system that integrates a number of multiple cutting-edge technologies that combine environmental perception, decision-making and planning, vehicle control, and communication into a single dashboard that can be monitored by the fleet manager.
The system can even diagnose faults on individual vehicles and bring them back to service before they break down in the field – a huge potential problem if a truck or dozer gets caught underground!
The ZNK95 has already been deployed at a large, open-pit mine in Inner-Mongolia, China, that has adopted a comprehensive unmanned and electrified construction solution from XCMG Machinery for its latest “green” mining operation. The company says the mine will emit 149,000 fewer tons of harmful carbon emissions than it would with diesel haul trucks annually by the time its full order of ZNK95s is delivered in 2026.
But wait, there’s more …
If you needed a reminder that China is light-years ahead of the US when it comes to electrification tech (and, yes, I know light-years measure distance and not time – grow up), you should know that XCMG’s swappable battery tech, which features 400 kWh packs using BYD blade-style battery cells packed at a facility that’s run as a JV between XCMG and BYD, is such a non-event in a country that’s seen millions of swaps that it didn’t even merit a press release at Bauma.
The trucks were just shown, and even that was after more than 1500 of the battery-swap capable MDEVs (XCMG’s new XG2 EX630S cabovers) was already delivered to customers in China and put into service.
In fact, the only reason I know about it at all was because I follow Etrucks New Zealand, an XCMG dealer, on LinkedIn, and he was talking it up.
“XCMG are by far the dominant EV exhibitor at Bauma Shanghai. Here a truck crane solution to swap construction machine batteries,” said Ross Linton, owner and President of Etrucks New Zealand. “Here a truck crane solution to swap construction machine batteries.”
XCMG battery swap crane
I’ll be at CES next week, where I’m sure Caterpillar will be playing up its 100th anniversary, John Deere will once again show off a new, updated remote/autonomous solution, and Volvo will reveal another new addition to its HDEV line-up. None of them are likely to show up with a practical battery-swap EV solution that’s ready to deploy, today.
Instead, they’re all playing catch up – if they’re aware of XCMG at all.
SOURCES | IMAGES: Etrucks New Zealand, International Mining, USS.
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