Speaker 1: Hi, I'm Dana Perkins and you're listening to Switch It
Speaker 1: on the bn EF podcast. So BE an F recently
Speaker 1: published our new Energy Outlook. It's an annual exercise where
Speaker 1: we look at the future and possible scenarios for energy
Speaker 1: and emissions out to the year twenty fifty. One of
Speaker 1: the things this year's Outlook has shown is that we
Speaker 1: may have brought forward a triple peak in emissions coal
Speaker 1: and gas, and what if we've also brought forward a
Speaker 1: peak in oil demand? And what if it's actually already
Speaker 1: happened in nine Now that's sort of the nature of
Speaker 1: a peak is that you don't know that it's happened
Speaker 1: until you look back and you see that the peak
Speaker 1: is there and you're on the other side. So that's
Speaker 1: what we're going to talk about today, whether or not
Speaker 1: this maybe already happened. Today, we're speaking with David Doherty
Speaker 1: on the show. He's an oil demand analyst here at
Speaker 1: b ANF and Mark Taylor and I talked to him
Speaker 1: about whether we are or are not on the downhill
Speaker 1: slide or oil demand. Per our usual disclaimer, BE and
Speaker 1: the F does not provide investment of strategy advice, and
Speaker 1: we have a full disclaimer at the end of the show.
Speaker 1: If you want to read the full New Energy outlook,
Speaker 1: you can find it at b enof Go, on the
Speaker 1: Bloomberg terminal at b NF dot com, or on b
Speaker 1: NF's mobile app. Now, let's talk to David about peak oil. David,
Speaker 1: thanks for joining us, Thank you for having me. Always
Speaker 1: good to have you on the show. So, David, you're
Speaker 1: here today and you are an oil demand analyst, and
Speaker 1: we're here to talk about peak oil. Now, I'm going
Speaker 1: to rewind the clock to you know, version of me
Speaker 1: and graduate school, young whipper snapper talking about peak oil.
Speaker 1: And when I think of peak oil, I always think
Speaker 1: of it as a supply side issue in US having
Speaker 1: a difficult time actually extracting and becoming increasingly expensive and
Speaker 1: therefore we're no longer able to get oil out to everybody. David,
Speaker 1: what is peak oil from the demand side? Yeah, it's
Speaker 1: a good question, and it's changed, I guess from when
Speaker 1: you're talking about and from when I got into the
Speaker 1: industry as well, and the US found shale technology, advanced
Speaker 1: old fields could be developed more and supply was basically
Speaker 1: not a concern anymore. There was enough to go around
Speaker 1: and enough to meet all of this new demand. The
Speaker 1: shift between then and now is a bunch of different things.
Speaker 1: You know, efficiency gains, consciousness of the environment, and now
Speaker 1: it's a focus on oil demand speaking, So when will
Speaker 1: people want to or need to consume less oil that?
Speaker 1: Obviously that impacts all the way down the value chain.
Speaker 1: Do you need to take it out of the ground?
Speaker 1: How do you consume that? What emissions go out into
Speaker 1: the world, So totally different to the way we used
Speaker 1: to think about it and saying is there enough for
Speaker 1: us to be able to meet our needs versus do
Speaker 1: we need this much to meet that amount to take
Speaker 1: it out of the ground. So yeah, completely flipped first
Speaker 1: is what we would sort of have spoken about this
Speaker 1: time ten years ago. Is understanding peak important? Is it
Speaker 1: anything more than an academic exercise or does it allow
Speaker 1: you to do anything that you wouldn't do otherwise? The
Speaker 1: answer is yes and no. Right, if you're taking this
Speaker 1: stuff out of the ground or extracting it, you want
Speaker 1: to know when or at what rate you're going to
Speaker 1: need less of it or people are gonna want less
Speaker 1: of it. So obviously, if you're an oil producer, you
Speaker 1: want to know when people are going to want more
Speaker 1: or less of your product, right, and when that occurs
Speaker 1: in terms of environmentalists or people who are concerned about
Speaker 1: emissions or global warming, oil isn't great obviously in that
Speaker 1: sense for the environment. So the less that's consumed and
Speaker 1: the less that's burned at the end of the day
Speaker 1: and admits less is a good thing for the environment, right,
Speaker 1: So yes, and know in those senses, when is kind
Speaker 1: of the less important part. I would argue whether it's
Speaker 1: twenty thirty, whether it's I think what we've sort of
Speaker 1: discovered in the last little while, maybe two three years,
Speaker 1: is that peak demand is in sight. And in many
Speaker 1: cases people think peak demand may have even happened. We
Speaker 1: saw at least in jewel terms, BP this year is
Speaker 1: saying nineteen might have been the peak for oil demand.
Speaker 1: Why are they saying that? They've got a bunch of reasons,
Speaker 1: but hind it. One is we might not recover after COVID.
Speaker 1: It's took such a hit this year. We've seen oil
Speaker 1: deman this year go down almost ten percent, right, so
Speaker 1: wiping out almost a decade of growth and gains. So,
Speaker 1: you know, will we get back the levels? I mean,
Speaker 1: it depends we're you know, working from home here at
Speaker 1: Bloomberg and YEF, will we go back into the office,
Speaker 1: will we drive a car if we go into the office,
Speaker 1: depending on where we are, Will I fly to see
Speaker 1: my family next time? Lots of different things, right, Just
Speaker 1: the way that we live has changed, so they think
Speaker 1: that might have caused the shift in some of their scenarios.
Speaker 1: And even when we get back to gains or growing
Speaker 1: again or quote unquote normality, what does that normality look like?
Speaker 1: Are we still going to be flying as much? Is
Speaker 1: it going to be as cheap to fly? Will there
Speaker 1: even be an airline for us to fly with? You know,
Speaker 1: those kind of questions totally structural changes will impact the
Speaker 1: consumption profile of this product for sure. So David, we
Speaker 1: could actually just retitle this podcast like ask the expert.
Speaker 1: You're the expert here today, and you've read a bunch
Speaker 1: of these different scenarios, and I want to know what
Speaker 1: is your view? When do you think did the peak
Speaker 1: already happen or is it outcoming? And you know, I
Speaker 1: want to make sure I plan to have like give
Speaker 1: it its momentous occasion, because if it's already happened, and
Speaker 1: I totally missed it. I'm feeling a little bummed out
Speaker 1: about that. When do you think this is going to happen?
Speaker 1: We are calling a peak first, I mean expert I
Speaker 1: think is a dangerous term. I think maybe energy or
Speaker 1: an oil nerd is a good way to phrase it.
Speaker 1: As the nerd. As the nerd, we look at this
Speaker 1: every day, and this is kind of our bread and button,
Speaker 1: and we look at all of the really detailed, boring
Speaker 1: parts that in general people that want to pay attention to, like,
Speaker 1: hen many cars are on the road, how will those
Speaker 1: cars be driven? Will it be electric or gastine, etcetera, etcetera.
Speaker 1: So we have been are calling a peak in five again.
Speaker 1: I think the time range is kind of I don't
Speaker 1: say irrelevant, but you're seeing three is kind of that
Speaker 1: time period, depending on who you're talking to, of quote
Speaker 1: unquote experts calling peak oil demand. And it really comes
Speaker 1: down to when they see different technologies overtaking things like
Speaker 1: internal combustion engine cars, how many people consume plastic wrapping
Speaker 1: on their food, how quickly the population grows and GDP grows,
Speaker 1: and so there's a few kind of underlying currents on it.
Speaker 1: But the fact that the vast majority of forecasters now
Speaker 1: see this happening even in that fairly wide period of
Speaker 1: time is different too, if we're going to have this
Speaker 1: chat even a year ago. So this came from an
Speaker 1: exercise BNF does every year called the New Energy Outlook
Speaker 1: or NEO. Can you explain a bit your methodology how
Speaker 1: you got to peak? As you mentioned some of the
Speaker 1: economic undercurrens there, but cow us did you did you
Speaker 1: arrive at the conclusion of peak? The way that we
Speaker 1: look at oil, we don't look at oil as a
Speaker 1: whole market. We have separate sort of deep dives into aviation,
Speaker 1: a different deep dive into cars, into ships, into plastics
Speaker 1: and petrochemicals and power markets. And at the end we
Speaker 1: all came together in our team and put them into
Speaker 1: one piece. And it was sort of exciting for us
Speaker 1: to see when all these numbers are added together, what
Speaker 1: year did we called peak one? Because it's the number
Speaker 1: everybody's going to talk about and we compare ourselves to others.
Speaker 1: So whether it came to counting cars on the road,
Speaker 1: what powered those cars, counting airplanes and the sky ships
Speaker 1: on the sea, um demand for plastics and packaging. We
Speaker 1: went from the ground up for all of these pieces,
Speaker 1: piece them altogether and got to this overall peak oil
Speaker 1: demand story by five. And it is interesting to see
Speaker 1: when you look at those individually, you don't think at
Speaker 1: all about what this means for peak oil de man
Speaker 1: as a whole. You're really looking at the sector as
Speaker 1: a base. So you know, some do peak, some don't.
Speaker 1: We think aviation, unless there's going to be something rapid
Speaker 1: or a big technology change, probably won't peak in the
Speaker 1: next thirty years or so, whereas where there are some
Speaker 1: other sectors that have a solution already in place, maybe
Speaker 1: not at scale just yet, Um, there's hope for peak there.
Speaker 1: So when we look at them individually, we weren't really
Speaker 1: thinking about a peak oil story when we roll them all, look,
Speaker 1: but we've got that kind of exciting one veil of
Speaker 1: that was it. So it's massively at bottom up exercise
Speaker 1: with lots of nice inputs and data points that got
Speaker 1: to this sort of over arch of peak oil demand story.
Speaker 1: To your point about COVID, there are certain industries though
Speaker 1: that maybe take quite some time to come back. So
Speaker 1: you mentioned aviation just now, and I'm thinking about all
Speaker 1: of the British Airways planes that have been retired and
Speaker 1: the fact that they recently started selling off the I
Speaker 1: guess the business class and the first class cutlery and
Speaker 1: plates and bowls and things. But I mean, in all seriousness,
Speaker 1: that's an entire fleet of planes that have been retired
Speaker 1: because they're not in use at the moment. It's going
Speaker 1: to take some time for that to come back. And
Speaker 1: do you think that that gap, I mean, I know
Speaker 1: we're here to talk about peak oil, but in not
Speaker 1: aviation specifically, But do you think that that gap could
Speaker 1: provide potentially a space for some of these industries that
Speaker 1: are hard hit by COVID to actually re emerge differently? Yeah,
Speaker 1: come back, greener, I guess is that kind of fingured
Speaker 1: it into its a in stressed area for lots of
Speaker 1: different sectors and lots of different bodies who regulate or
Speaker 1: orchestrate what happens in these sectors. If we look at
Speaker 1: the aviation sector as an example, you're seeing less and
Speaker 1: less of us flying this year, about fifty less people
Speaker 1: are flying versus last year, right, or less passengers, I
Speaker 1: should say, So you don't need as many airplanes. The
Speaker 1: older airplanes, like you said, are getting parked or taken
Speaker 1: apart for pieces and what's left is basically the more
Speaker 1: efficient ones. Right. An airline doesn't want to spend its
Speaker 1: money on jet fuel, right, It wants to have a
Speaker 1: really efficient airplane and get tickets in and fly people.
Speaker 1: You can take the same logic and look at different
Speaker 1: sectors the same way. Some it's beneficial for well this
Speaker 1: it's not so. If you look at plastics, for example,
Speaker 1: there's more demand this year for plastics. You're seeing a
Speaker 1: lot of things. If we get a meal, now you
Speaker 1: don't just get a knife and fork that's plastic, get
Speaker 1: a plastic knife and fork that's wrapped in plastic. More
Speaker 1: plastics and masks for example. And then you have cars
Speaker 1: we saw this year, for example, passenger car sales pretty
Speaker 1: much around the world have fallen and in some cases
Speaker 1: collapse in sales. That means that the turnover of the fleet,
Speaker 1: of the internal combustion engine fleet at least is slower.
Speaker 1: So you've got more inefficient cars left on the road.
Speaker 1: You could argue the driving more or less. And in
Speaker 1: some cases you've seen the sales that are recovering a
Speaker 1: lot more of them being electric cars. So Europe is
Speaker 1: a good example where they're incentivizing to get any car
Speaker 1: sales going electric cars, and we're seeing big proportions of
Speaker 1: all the new cars sold in Europe being electric. So yeah,
Speaker 1: it's it's not as easy as story is saying, oh,
Speaker 1: it's coming back greener, because every sector is very different,
Speaker 1: but you are having pushes, particularly from some policymakers to
Speaker 1: go towards that way. Last year, we had you on
Speaker 1: the show talking about road fuels and the outlook for those,
Speaker 1: and the conclusion was that they were going to keep
Speaker 1: going up, right, because I think it was increased deliveries
Speaker 1: and I think increased drivers or because number of drivers
Speaker 1: in currently developing markets. Did your outlook change for road
Speaker 1: fuels as a part of this neo exercise? And how
Speaker 1: does that fit in with peak oil? It feels the
Speaker 1: most important part of the oil consumption. Pie. It's about
Speaker 1: it something like forty seven percent of all of the
Speaker 1: oil consumed in the world. So when we spoke about
Speaker 1: this last year, we saw the passenger consumption, so passenger
Speaker 1: cars that me and you would drive, for example, demand
Speaker 1: is likely to decline. We're seeing lots of electric vehicles,
Speaker 1: lots of regulations about fuel economy, so that that goes down.
Speaker 1: What we saw driving growth was truck's, commercial vehicles, things
Speaker 1: like Amazon deliveries, and again COVID has impacted each of
Speaker 1: these segments very differently. So in Europe we're working from home,
Speaker 1: for example, the vast majority of commuters in Europe go
Speaker 1: to work on things like the tube here in London
Speaker 1: or the metro in Paris for example, So that doesn't
Speaker 1: directly impact well, it does directly if you get a bus,
Speaker 1: but it doesn't as have as big an impact on
Speaker 1: road field consumption as if you were to take the
Speaker 1: same example in the United States, where a lot of
Speaker 1: people drive to and from work right over nine. So
Speaker 1: the private or the passenger segment, I mean you're driving,
Speaker 1: took a big hit this year in in the world
Speaker 1: pretty much in terms of oil consumption. On the other side, though,
Speaker 1: we've all been shopping online Ali Baba Amazon. My mom
Speaker 1: now does her shopping and gets her stuff delivered to
Speaker 1: her instead of her driving to the store to get it.
Speaker 1: And now she's quite comfortable and that drives a lot
Speaker 1: more than shoes to That means that there needs to
Speaker 1: be a delivery driver to send that to her house.
Speaker 1: So what we've seen is we've actually got support for
Speaker 1: things like delivery vans that normally run off of diesel
Speaker 1: driving to the house of somebody and delivering something, as
Speaker 1: opposed to say the gasoline that was consumed in the
Speaker 1: passenger car going to a store to get something. So
Speaker 1: underlying all of this destruction, you're seeing a change in dynamics.
Speaker 1: And this is really important if you're a refiner or
Speaker 1: a fuels producer, right, you want to know what's doing well,
Speaker 1: what's not doing so well. Jet fueled man is quite
Speaker 1: obvious to go down. Gasoline is taking a hip. Diesel
Speaker 1: is doing not so great, but much better than gasoline. Right.
Speaker 1: This all impacts that these guys are going to run
Speaker 1: their companies. So every sector COVID hit in a different way.
Speaker 1: Passenger and road transport in general not left alone, but
Speaker 1: under that sort of there's different dynamics of things that
Speaker 1: have done really well out of it. So more deliveries
Speaker 1: for sure, Mrs Doherty, if you're listening, you're not alone.
Speaker 1: I haven't been to a grocery store in over six months.
Speaker 1: I don't remember the last time I've been in the store.
Speaker 1: I think, I think I feel sorry for the delivery
Speaker 1: drivers who have to have a chat once they deliver
Speaker 1: I was gonna say, my street is nothing but delivery
Speaker 1: vans all day long. Yeah, I think we've all thought
Speaker 1: it's a good idea and it is actually incredibly helpful.
Speaker 1: But yeah, that impacts how we drive our own personal cars. Right,
Speaker 1: So different dynamics and the oil, the oil pie underlying
Speaker 1: all that. Now for a very short break, stay with us, So, David,
Speaker 1: surely this is something that the oil and gas industry
Speaker 1: is watching extremely closely themselves. So what is the reaction
Speaker 1: from that side and what did their forecasts say? Do
Speaker 1: they differ? Yeah, there's a huge variety of forecasts out
Speaker 1: there in terms of oil consumption, different scenarios around it.
Speaker 1: What are the drivers? What does it mean for our
Speaker 1: business model? Are we going to completely change our business model?
Speaker 1: And it really really varies, honestly. You've got some people
Speaker 1: like BP and Hotel who are looking at declining oil
Speaker 1: demand from about twenty thirty onwards, and then you've got
Speaker 1: others like OPEC, for example, who see it getting slower
Speaker 1: in terms of growth but still growing out for example,
Speaker 1: So two different stories. If you were to look at
Speaker 1: those forecasts, what does it mean for an oil and
Speaker 1: gas company? I mean in theory. This is their bread
Speaker 1: and butter. We're seeing different approaches. Some are turning into
Speaker 1: energy molecule sellers, if that makes sense, as opposed to
Speaker 1: oil and gas producers. So I want to sell you
Speaker 1: a jewel of energy that could be electric for your car,
Speaker 1: that could be you know, anything for your home, gas,
Speaker 1: you name a biofuel, their few we got you, and
Speaker 1: you've others here sticking to oil and gas. So massive
Speaker 1: different forecasts out there and big variations in terms of
Speaker 1: approach and how they'll respond to this. Either way, there
Speaker 1: will be a requirement for oil we think in the
Speaker 1: next thirty or forty years, and and how that comes
Speaker 1: out of the ground and who produces it, you know,
Speaker 1: it remains to be seen. But we have seen this
Speaker 1: year and it's interesting that has been the year for it.
Speaker 1: Given the massive disruption to demand and the hit for
Speaker 1: the oil sector, we've seen a lot of strategies changing.
Speaker 1: You know, the European oil majors, for example, have really
Speaker 1: shifted towards this big energy business model where we'll send
Speaker 1: we'll sell you anything from hydrogen to bios us to
Speaker 1: you know, electricity and more renewable focused energy supply. And
Speaker 1: we've seen others like national oil companies who don't normally
Speaker 1: outline strategies stick towards the oil and gas side of things,
Speaker 1: and even some of the US oil majors sticking towards it.
Speaker 1: But without question, this disruption to the man and this
Speaker 1: peak story, it hits the bottom line for an oil
Speaker 1: and gas company. I mean, we've seen in over seventy
Speaker 1: billion dollars of right downs at the five big oil
Speaker 1: majors already. That compares to like thirty billion dollars in
Speaker 1: fourteen during the previous oil price crash, so really really
Speaker 1: large numbers here. It is a bit of a reality
Speaker 1: check for their business model. They know this, and it's
Speaker 1: it's not news to an oil and gas company who
Speaker 1: are looking at this, But we have seen that this
Speaker 1: big demand shifts in mentality or maybe acceptance might be
Speaker 1: a better way to phrase it. You know, ultimately is
Speaker 1: going to impact the oil price long term, and that
Speaker 1: changes what oil barrel you're going to go for in
Speaker 1: the future, and what when you're going to try to
Speaker 1: get out of the ground, and how can I make
Speaker 1: an oil barrel more appealing in the future while keeping
Speaker 1: it cheap and keeping its emissions as low as possible.
Speaker 1: It just maybe kind of wonder I guess which companies
Speaker 1: are going for the power model, but also which ones
Speaker 1: are going all in on oil. Like we talked a
Speaker 1: couple of weeks ago on the pod about I think
Speaker 1: it's occidental who's going in all in on oil, but
Speaker 1: they're also banking on ccs, you know, at least in
Speaker 1: name I don't know, or c c US whatever you
Speaker 1: wanna call it. Do you see that as common or
Speaker 1: or other companies taking this on all? Are they kind
Speaker 1: of alone in this? No, it's not, it's not uncommon
Speaker 1: at all. You're seeing a real split at least in
Speaker 1: the integrated oil companies or the listed Western oil companies
Speaker 1: I suppose. And again, if you look at in Europe,
Speaker 1: you're seeing the likes of BP, Shell and Hotel setting
Speaker 1: quite aggressive missions reduction targets, normally by far away and
Speaker 1: a lot of it's sort of phrased in a way
Speaker 1: that will actually allow them produced to produce more oil
Speaker 1: and gas if they wanted to throw me like energy
Speaker 1: intensity based. But you are seeing others who are really
Speaker 1: focusing on the oil and gas story. It's not necessarily
Speaker 1: a bad approach because the way the oil comes out
Speaker 1: of the ground. It doesn't just keep flowing forever. You know,
Speaker 1: you've got oil wells and current fields that deplete over time.
Speaker 1: So if you were to look at all of the
Speaker 1: oil that's being extracted today and then look at the
Speaker 1: same supply in twenty you're going to have less than
Speaker 1: a third of that still coming out of the ground, right,
Speaker 1: so you need to replace it. And you're seeing places
Speaker 1: are companies like Conico and Occidental still focusing on extracting oil.
Speaker 1: How they do it, you know, it varies. It could
Speaker 1: be a shale play, it could be offshore place, but
Speaker 1: in general they're shifting towards getting at least the carbon
Speaker 1: profile of their barrel lower, so that every barrel that
Speaker 1: they extract has a better carbon emissions profile than the
Speaker 1: one that they had extracted. You know, in the previous year.
Speaker 1: Some of them have set targets, some of them are
Speaker 1: relying on new technologies. Actually they're all relying on new
Speaker 1: technologies that haven't really been tested or put into scale
Speaker 1: just yet. But at least they're shifting towards that that
Speaker 1: model of things, And you're even seeing it with some
Speaker 1: of the oil majors who want to become a big
Speaker 1: energy supplier and shift away from oil and gas hotel
Speaker 1: for example. They'll still continue to take oil and gas
Speaker 1: out of the ground, but they're focusing on the cleaner
Speaker 1: barrel or the higher return cleaner barrel in future. So
Speaker 1: they're not saying no to oil and gas. They're saying,
Speaker 1: we're gonna go for the less carbon intensive and the
Speaker 1: less risky. Big projects like Arctic drilling and things like
Speaker 1: that have kind of fallen by the waistside now because
Speaker 1: oil prices are just much lower they can't justify that
Speaker 1: big project. But some more simplified like North African extraction
Speaker 1: projects for example, are still getting attention from these oil
Speaker 1: and gas companies, even the ones that want to shift
Speaker 1: towards a utility or renewables power supplier kind of company.
Speaker 1: So yeah, there's totally different approaches, and some are better
Speaker 1: than others at least in indicating how they're going to
Speaker 1: go and extracted in at least a sustainable way. But ultimately,
Speaker 1: you're going to need new supply of oil. Even if
Speaker 1: demand really comes off a cliff and falls to something
Speaker 1: like million pars per day, you're still going to need
Speaker 1: new supply to come and meet that. So there's still
Speaker 1: a business there, and we're gonna see oil being a
Speaker 1: handling used for quite a while. Right. It's still the
Speaker 1: entry level jewel to get people out of poverty and
Speaker 1: supply them most things like wheels that they can drive,
Speaker 1: right and cooking a while, et cetera. So, yeah, there's
Speaker 1: a lot of good in oil. I guess you've just
Speaker 1: got to think about how it can be extracted in
Speaker 1: a sustainable way and where there is an alternative. I
Speaker 1: think that's where we're seeing investment and interest being put into.
Speaker 1: So that brings us really well to the regional dynamics.
Speaker 1: And so for these peaks happening at different points in
Speaker 1: different places, and what are the regional dynamics around peak
Speaker 1: oil demand. It's a really interesting story even in how
Speaker 1: oil and gas companies approach their targets and where they
Speaker 1: want to sell into. You're seeing different strategies been put
Speaker 1: in place Southeast Asia and a Arica or for example,
Speaker 1: growth stories where there's new population coming into wealth, or
Speaker 1: where people for example, don't own a car, get access
Speaker 1: to a car, and when it drives that car, they
Speaker 1: don't care if the car is gasoline, diesel, or electric.
Speaker 1: They need a set of wheels and they want to
Speaker 1: get around, right, it's mobility for them. First step is
Speaker 1: getting moving. And then you've got other regions like Europe
Speaker 1: for example, that have quite specifically said we want to
Speaker 1: be net zero by X year. China came out a
Speaker 1: few weeks ago said the same. For you are seeing
Speaker 1: shifts towards this amongst policy makers. That obviously has an
Speaker 1: impact on where oil consumption happens and how it develops
Speaker 1: in future. And I think you'll probably see a clearer
Speaker 1: path or a direction coming from the US now that
Speaker 1: there will be a new president in place come So yeah,
Speaker 1: it's a different story in all different regions of the world,
Speaker 1: and that really has impacted how the oil companies based
Speaker 1: on those regions have reacted so total. For example, they
Speaker 1: have a net zero to target for European oil sales
Speaker 1: on the product, which they don't have for other parts
Speaker 1: of the world. That's kind of a talent sign to me.
Speaker 1: We've already got places that road fuel consumption has peaked
Speaker 1: and is in decline in Europe for example. So yeah,
Speaker 1: the story is completely different and moving at different paces.
Speaker 1: Some are going to see different parts grow, some are
Speaker 1: going to see parts slow, even in places like Europe,
Speaker 1: where it's probably going to be the first place to
Speaker 1: peek and decline, you're going to see things like aviation
Speaker 1: fuel continue to grow. So the story is different by sector,
Speaker 1: by reagion, by fuel type, but it's fast moving and
Speaker 1: it changes, you know, as soon as the regulation comes
Speaker 1: into play or policy. We're seeing these things tipped quite quickly.
Speaker 1: So while we wouldn't have had this chat a year
Speaker 1: ago or two years ago and said these same things,
Speaker 1: you know, a year makes a massive difference when we're
Speaker 1: seeing these big pushes and long term comeback greener, I
Speaker 1: guess after this COVID, So the takeaway to me seems
Speaker 1: to be okay, come back greener for one, but also
Speaker 1: that necess are they looking at the peak but everything
Speaker 1: besides the peak? You know, the things that contribute to
Speaker 1: reduction in oil demand are the things that you actually
Speaker 1: need to be we've you know, humans actually need to
Speaker 1: be looking at to understand peak. Is that fair? Yeah?
Speaker 1: I think that's fair. Substitution is a big part of
Speaker 1: what drive system when that number we think happens comes
Speaker 1: or if it doesn't come, I mean, whether we drive
Speaker 1: use plastics, reduce the plastics. Yeah, Okay, and so that
Speaker 1: kind of leads me to, are there any sectors or
Speaker 1: questions in your analysis either this year in NEO that
Speaker 1: we're kind of gaps or that you hope to fill
Speaker 1: next year? Is to get more detail on I mean,
Speaker 1: every year we try to build down new technologies and
Speaker 1: see what might change or fundamentally destruct the oil market.
Speaker 1: A good example, I guess this year is the aviation sector.
Speaker 1: We saw earlier in this year, for example, air Boss
Speaker 1: saying that they're going to introduce a hydrogen powered aircraft
Speaker 1: for commercial use in the second half of the twenty thirties.
Speaker 1: We don't understand enough about that just yet to see
Speaker 1: what disruption that could cause. But as new technologies come
Speaker 1: into the mix and start to be you know, taken
Speaker 1: more seriously, we have to think about how that is
Speaker 1: going to impact the oil market. And those things can
Speaker 1: you know, they come at a tipping point and then
Speaker 1: go quite quickly. If you look five or six years
Speaker 1: ago at a forecast for the road field sector, there
Speaker 1: will not be that many electric vehicles baked into that forecast,
Speaker 1: and that's changed significantly regardless of who forecasts. So things
Speaker 1: like this happened quite quickly. Might be if we see
Speaker 1: that actually electric vehicles or hydrogen trucks become cheaper, quicker, faster,
Speaker 1: and get rolled out quicker. Likewise, that peak and beyond
Speaker 1: where we see a decline, it might be a much
Speaker 1: faster decline if the you know, the aircraft fleet is
Speaker 1: ran on hydrogen, or if all the plastic is recycled
Speaker 1: and the circular economy policies take a grip and change
Speaker 1: that sector completely. So yeah, there's a bunch of things
Speaker 1: that can be done that it will completely change this outlook.
Speaker 1: Each year. We're going to add into it, of course,
Speaker 1: and I do things better and more granularity to get
Speaker 1: a better understanding of them. But it just takes one
Speaker 1: or two technology changes to really shift how quickly this
Speaker 1: thing goes from a story into maybe a story. But
Speaker 1: I think that there's more that can happen to bring
Speaker 1: it closer to us in time then would likely happen
Speaker 1: for to move further out of time. So what I
Speaker 1: mean is more likely that it will happen quicker and
Speaker 1: peak versus being pushed back and further out into the future.
Speaker 1: It can happen faster. I guess that's all you're saying.
Speaker 1: I think, so, yeah, yeah, I think so you get
Speaker 1: a policy, push a subsidy something like that, and you
Speaker 1: never know, Like the trucking fleet in Europe could switch
Speaker 1: away from diesel quite quickly if it was pushed to
Speaker 1: do so. That's big, that's a big amount of barrels.
Speaker 1: So yeah, it can happen pretty quickly. I still always
Speaker 1: think about how quickly mobile phones have changed the way
Speaker 1: that we all live. I think someone said that, like
Speaker 1: technology feels like it's happening really slowly, but actually it
Speaker 1: happens extraordinarily fast. I mean, the key thing for anything
Speaker 1: is that the substitute needs to do the exact same
Speaker 1: thing as the thing that it's replacing. We've seen already
Speaker 1: with electric vehicles that people talking about, you know, range
Speaker 1: anxiety for example, has gone away really quickly. So if
Speaker 1: you could get truck drivers on board and say, do
Speaker 1: you know, actually this hydrogen powers my truck and I
Speaker 1: can drive it the same way as I used to
Speaker 1: drive my diesel, whether their shipped towards it. When the
Speaker 1: cost makes sense, if I'm flying somewhere on vacation and
Speaker 1: it's an electric or a hydrogen aircraft, and I don't
Speaker 1: have to pay four times the ticket price and it's
Speaker 1: pretty much the same. You know, I'm gonna fly on
Speaker 1: that airplane, but it has to be a perfect replacement.
Speaker 1: I guess you know everybody has had that Soviet paper
Speaker 1: or cardboard straw with their drink, and nobody loves that.
Speaker 1: That's not a direct replacement for a plastic straw, right,
Speaker 1: It ruins your drink. So it's all about what the
Speaker 1: replacement can do to mimic and directly replace the thing
Speaker 1: that is getting rid of O shifting. So between now
Speaker 1: and hopefully you will still be doing this podcast at
Speaker 1: that point, let's make sure that we don't miss the
Speaker 1: peak if it hasn't already happened. If we find that
Speaker 1: that day has come, we'll have you back on the
Speaker 1: show and we'll talk about it then. Thanks, Dana, I
Speaker 1: take that as an open in fine. Thanks, guys enjoyed.
Speaker 1: Today's episode of Switched On was edited by Rex Warner
Speaker 1: of Gray Stoak Media. Bloomberg an e F is a
Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This
Speaker 1: recording does not constitute, nor it should it be construed
Speaker 1: as investment advice, investment recommendations, or a recommendation as to
Speaker 1: an investment or other strategy. Bloomberguin e F should not
Speaker 1: be considered as information sufficient upon which to base an
Speaker 1: investment decision. Neither Bloomberg Finance LP nor any of its
Speaker 1: affiliates makes any representation or warranty as to the accuracy
Speaker 1: or completeness of the information contained in this recording, and
Speaker 1: any liability as a result of this recording that expressly
Speaker 1: disclosed