Trump and Peak Oil Demand

President Trump wants more oil.
The energy sector has other plans.

 

 

 

By J. Dan E. Maruska

On Thursday, President Trump released a proposal to increase acreage available for oil and gas exploration in coastal waters off the United States. Such a proposal is peculiar at a time when the world is preparing not for a shortage of oil, but for a surplus of it.

According to the major players in the energy industry, the world is facing peak oil demand, and that remaining demand will decrease in the coming decades. In fact, both the market and a powerful coalition of actors in the energy sector are transitioning away from fossil fuels and toward renewable energies.

These actors include countries such as China, which is rapidly increasing electric vehicle production in order to dominate that industry; European countries, which are phasing out the sale of internal combustion engines; and even oil-producing countries and OPEC members like Saudi Arabia, which is formalizing agreements within OPEC and even with Russia to cap energy output to preserve market share.

The automobile companies are also making this transition. Nearly every manufacturer from Japan, the United States, and Europe has electric-vehicle programs and plans to replace the use of internal combustion engines.

But most important of all, energy companies themselves are preparing for a world that uses less oil. Total, the French-based producer, recently purchased two renewable energy companies: SunPower, a solar-panel manufacturer, and Saft, a battery manufacturer. The company is also installing electric-car charging stations throughout France. Royal Dutch Shell is also adding charging stations. Statoil, the Norwegian producer, is adding floating offshore wind farms. And BP is also increasing its investments in wind-energy production.

The proposal, which the Department of the Interior calls the Draft Five Year Outer Continental Shelf Oil and Gas Leasing Program, is simply a sale of leases to American oil companies. The apparent intention is to give American firms a chance to increase their own global market share. But increasing market share of an energy sector going the way of coal and wood will be of little advantage to anyone.