Demand for overall fossil fuels may have permanently peaked in 2019 and will likely continue to fall thanks to the COVID-19 pandemic, a report from the Boston Consulting Group showed. The health crisis snatched more than 20% of global oil demand from a peak of more than 100 million in 2019. The growing renewable energy supplies, as well as the rising trend of telecommuting and working from home, are expected to accelerate the decline, the report said.
According to the report, a slower U-shaped economic recovery could mean the world’s oil demand would never hit the 2019 level again, while a quicker V-shaped recovery might restore global oil consumption by 2022, but the energy sector is expected to remain weak.
The report noted that the US shale industry would take the hardest hit from the fall in fossil fuel demand. A separate industry survey showed that the number of active rigs and fracking crews in the US had been down by nearly 75% since mid-March. Rigs count is expected to hit bottom soon and will likely stay low until 2021. Meanwhile, US upstream capex has slumped by 35% for this year.
In contrast, demand for wind and solar power is expected to continue increasing worldwide, despite a slowdown during the pandemic. The International Energy Agency (IEA) expected power generation from solar and wind to expand by more than 10% and 15%, respectively. Combined with the continued growth of renewable energy sources, the rising popularity of electric mobility will put fossil fuel demand growth behind the GDP expansion, the report stated.
