Citi's new report "Global Oil Demand Growth - The End is Nigh" has been all over the financial world's echo chamber this week. And I think the Financial Times' Javier Blas has presented the fairest assessment of it:
What's Citi actually saying? First, it's not debunking Peak Oil. Remember - Peak Oil is simply a number. It's the maximum rate of oil production in the world. So if one day the world produces X million barrels of oil and the world never again produces that amount in a day - X is Peak Oil. The only way to prove Peak Oil false is to somehow prove that oil is infinite.
From that, the "Peak Oil Debate" is about everything around that number, when will it occur, how big will it be, will it be a single peak and decline or a plateau then a decline, how steep is the decline, what does the decline mean for society, et cetera. The Peak Oil Debate is about discussing all those questions and more.
I mention all of this just to say that Citi's report is their new entry into the "Peak Oil Debate" - it's their version of how they see things playing out (and as a reminder, "peak oil demand" isn't new - both Citi themselves and CERA have been pushing the idea for years). In their view, they see natural gas and other technologies coming online very quickly, this will allow substitution from oil in a manner and scale that hasn't previously been available. So while the story has been that oil demand will continue to increase after supply has peaked - Citi is suggesting that the substitution will occur so quickly that the demand of oil will peak before we reach supply constraints.
But as Blas' quote above suggests - a LOT of factors would have to break Citi's way for their prediction to come to pass. What happens if the shale boom starts to fizzle out, as analysis from the Post Carbon Institute suggests it will? What happens if natural gas vehicles and shipping vessels don't come online fast enough?
There's a great deal of uncertainty in any prediction, Citi's included. And that's important to remember as people breathlessly run around holding up Citi's report as if it's gospel.