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ExxonMobil said global oil demand would remain virtually unchanged through 2050 and warned that any action to restrict investment in fossil fuels would trigger a new energy price shock.
In a forecast published on Monday, the US oil company stated that oil demand will exceed 100 million barrels per day over the next 25 years – a forecast that assumes that even the energy transition will not succeed in quenching the world’s thirst for fossil fuels.
Exxon warned of a new global oil shock if companies were unable to meet demand through further investments. The company said the price of crude oil could quadruple if supply fell.
Exxon’s prediction is in stark contrast to that of British oil company BP, which expects its oil consumption to fall to 75 million barrels per day by 2050. The International Energy Agency estimates that oil demand would fall to 54.8 million barrels per day if governments were to keep their climate promises on time.
The Texas oil company’s forecast comes against the backdrop of an increasingly heated debate between fossil fuel producers seeking to defend their market and politicians and climate scientists warning of dangerous global warming if consumers do not quickly limit the burning of fossil fuels.
Exxon has long argued that the world needs more oil from it to lift billions of people in developing countries out of poverty. But environmentalists and politicians from California are suing the company. They claim that Exxon has deceived the public for decades about the fact that burning fossil fuels contributes to planetary warming.
The forecast comes three years after Exxon lost one of Wall Street’s most memorable shareholder battles to activist investor Engine No. 1, which argued the supermajor was taking an “existential business risk” by betting its future on fossil fuels. This year, Exxon sued activist investors who had submitted shareholder proposals demanding that the company do more to address climate change.
Despite continued strong demand for oil and gas, Exxon predicted that carbon dioxide emissions would fall by 25 percent by 2050. This would be due to increased energy efficiency and the introduction of technologies such as carbon capture and renewable energy.
However, this is well below the emissions reductions needed to achieve the net-zero targets set out in the 2015 Paris Climate Agreement.
In June, the Paris-based IEA, which represents rich world consumers, warned that the world faced a “staggering” oil surplus by the end of the decade if producers continued to increase output as the world moved away from fossil fuels.
The OPEC producers’ cartel called the IEA’s forecast a “dangerous comment” and stuck to its own prediction that oil demand would rise to 116 million barrels of oil by 2045.
Exxon’s report said oil and gas would continue to be critical to the global economy as population growth would lead to a 15 percent increase in total energy consumption by 2050.
Exxon predicted that oil demand for producing gasoline for passenger cars would fall by a quarter by 2050. However, the demand from industry – the largest consumption factor – would offset this decline.
Exxon uses the forecasts contained in its Global Outlook to determine its plans for future production growth. These are among the most optimistic in the oil industry and include the expansion of projects from the Texas shale oil field to the coast of Guyana.
Environmentalists said Exxon’s forecast was a last-ditch attempt by a dying industry to persuade investors to support new production.
“Expanding oil production has no long-term future and only a material risk as governments and financial institutions around the world are committed to an energy transition,” says Hannah Saggau, senior climate finance campaigner at the environmental organization Stand.earth.
