People around these parts don't much like those who say peak oil demand is inevitable. Can’t say that I blame them. The theory ain’t good for business in the short term  — although taking the appropriate actions now, assuming it is correct, could keep them from driving off a proverbial cliff in the more distant future. Funny thing, many of the people trying to debunk peak oil demand are the same ones who sold Peak Oil — on the supply side — like snake oil last decade. It's like these people just tell you folk what you want to hear, not what you need to hear.

The anti-peak oil demand mob has provided numerous arguments against the theory over the past few months, kinda shotgun-like, with some of the arguments relatively solid and interesting, and others no more than rhetorical tricks. The best of the tricks — the lynch mob conflating peak oil demand with “end of oil.” Somebody would have to be awfully stupid to believe there's going to be no more oil consumption someday, especially with petrochemicals and all. In reality, peak oil demand theory is saying something very different, that global oil consumption is going to peak sometime in the next decade or two, and decline thereafter.

Another zinger, although not quite on the scale of “end of oil,” global oil consumption has been ratcheting up at a near-record pace the past few years, so peak oil demand must be wrong. No doubt growth in global oil consumption has been strong recently, growing an average of 1.7 million bpd a year since crude oil prices collapsed in 2014, 500,000 bpd more than the 20-year average.

But that’s what happens when oil prices drop more than US$50 per barrel. It's called a “price effect” in economic lingo, and dwindles to next to nothing over several years. I know I don’t want another fifty-dollar drop in crude prices to get another one of them. Anyways, “near-record” appears to be a little old fashioned hyperbole, given that annual growth in global oil consumption averaged 2.3 million bpd as recently as 2003 and 2004 and 3 million bpd in 2010.

Next up, the stage coach versus automobile analogy. The automobile beat the pants off the stagecoach early last century because it was better in every dimension of utility: speed, power, range, cost, durability, comfort etc. etc. For example, Ford’s 20-horsepower Model T was 20 times more powerful than a stagecoach — guess that coach only had one horse. Is an electric vehicle (EV) going to be 20 times better than an internal combustion engine (ICE) vehicle? If not, today or in the future, there's no reason to believe EV will be adopted anywhere as quickly as ICE vehicles in the first half of last century, or so the lynch mob’s argument goes.

However, EVs don't have to be 20 times better than ICE vehicles to see their rapid adoption, because they've got something equally powerful driving them forward: government regulations. An increasing number of countries have banned, or are in the process of banning, the sale of ICE vehicles sometime in the future because of concerns about global climate change and local air pollution. Most worrisome for global oil consumption, India banning the sale of “traditional energy” vehicles as of 2030, and China said to be planning to ban them by 2040, if not earlier. India and China are supposed to account for three-quarters of global oil demand growth through 2030, and a third of growth the following decade.

Finally, getting to a relatively solid and interesting argument, the lynch mob says peak oil demand ain't possible because the economic transitions needed are just too darned big. It would take the biggest transition ever in not just one but two huge industries — oil and autos. Combined, annual sales for these industries add up to more than US$5 trillion dollars a year. The roots of oil and autos are “tough as oak trees,” they say.

But revolutions fell big, tough trees, especially when the industries themselves are leading the revolutions. Major automotive companies such as GM, Daimler AG, VW Group and Volvo are piling into EVs, not because they’re more profitable than ICE vehicles, they aren't, but because of regulations by governments at all levels, from supranational bodies like the EU to individual cities. For example, to meet new corporate fuel efficiency standards in the EU, the U.S. — assuming President Donald Trump does not scale them back or abolish them — and elsewhere, automotive companies have no choice but to produce and sell more EVs. Of course, outright bans on ICE vehicles are lurking in the more distant future.

At the same time, a number of major oil companies are already diversifying into renewables, the preferred fuel source for electricity generation to power all of them EVs in a carbon-constrained world, with Saudi Aramco possibly the most notable company. In fact, Saudi Arabia, a kingdom built on oil, is now moving beyond it. The goal of Crown Prince Mohammad bin Salman’s Vision 2030, a blueprint to restructure and diversify the economy, is to make the kingdom less dependent on oil revenue. A key element of this program is to sell part of Saudi Aramco to fund the Public Investment Fund (PIF) to help finance that shift.

In June 2016, Saudi Arabia’s new oil minister Khalid al-Falih said “we as human beings cannot be complacent and assume that oil will continue to fuel the world forever,” while his long-serving predecessor Ali al-Naimi referred to climate action as an “existential challenge” to the kingdom while serving in the post.

In contrast, Peter Tertzakian, chief energy economist at Calgary-based ARC Financial, recently provided a fine argument that supports peak oil demand theory. In an article published at the end of November, he argued that electric propulsion may come to the global trucking market even faster than for passenger vehicles.

Tertzakian wrote: Trucking companies — like any capitalist, profit-maximizing institution — make rational purchase decisions based on careful assessments of economic viability. Any capable Chief Financial Officer is algorithmically brain-wired to ask, “Is this thing going to make our company any more money?” If the answer is “yes,” the switch is often fast.

That is a big deal, not just for the timing of peak oil demand, but also for the rate of decline of oil consumption after the peak. Light-duty vehicles like cars and SUVs currently account for about a quarter of global oil consumption and heavy-duty vehicles such as buses and long-haulers another fifth.

To conclude, it's human nature to wanna lynch the messenger. I should know, having seen a fair share of lynch mobs over my career. Last decade I tried to debunk Peak Oil to keep Alberta and our oil industry from driving off a cliff. My apologies, I failed. To keep us from driving off another cliff, next decade or the one after, I'm even more determined to convince you all of the inevitability of peak oil demand and to provide strategies to best benefit from it.

End Note: A good place to learn more about peak oil demand theory, just in case you want to, is two articles I've written recently for the kind folk at JWN Energy Group: Peak Oil Demand Ain't No Peak Oil and Chindia's Oil Consumption Could Sorely Disappoint in Longer Term.