Many are familiar with peak oil theory — the idea that global oil production will hit a ceiling and then decline — yet the concept of peak oil demand, where demand will plateau before supply, appears to be replacing this controversial hypothesis. Amy Myers Jaffe, Executive Director of Energy and Sustainability at UC Davis, recently wrote in the Wall Street Journal that a combination of technical, economic, environmental and demographic shifts could lead to peak global oil demand in the next two decades. By contrast, the Energy Information Administration (EIA) projects that global oil demand will rise from 87 million barrels per day (mbpd) to 119 mbpd by 2040. A growing number of experts, and even oil companies, are beginning to reconsider what Jaffe calls the conventional wisdom surrounding growth in demand.
According to the EIA, demand for oil has already peaked in major, industrialized nations. The critical issue is whether this will be offset by a growing appetite for oil in the developing world. EIA projections are fueled by emerging economies in China, India and the Middle East. Yet the most recent outlooks from both BP and Exxon Mobil suggest that demand for oil in these regions will slow considerably by 2035, casting doubt on whether emerging economies will compensate for lagging demand in the industrialized world.