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Fossils Face Peak Demand by Mid-2020s, $19 Trillion in Lost Revenue by 2040

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Fossil companies stand to lose US$19 trillion in income by 2040, as cumulative electric vehicle sales hit 540 million and oil demand peaks in less than a decade, according to an analysis released this week by Oxford-based Aurora Energy Research Ltd.

The report “points to a possible energy future of mass electrification, digitization, and new technologies, in which the rise in electric vehicles [1] and continued improvements in fuel efficiency lead to peak oil demand occurring in the mid-2020s,” wrote Richard Howard, Aurora’s head of research. “This flips the very idea of ‘peak oil’—previously hypothesized for the supply side—as electricity grows in importance as a transport energy source.”

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As oil demand declines and prices fall, “OPEC’s strategy will change to increase production to gain market share from one of restricting supply in order to prop up prices,” Bloomberg states, citing the Aurora report. By 2040, the company predicts oil prices falling to $32 per barrel, from about $80 in 2018.

The report foresees total fossil revenue dropping to $21 trillion and the price of coal falling from $90 per tonne today to $28 in 2040, “barely above the marginal cost of production and transport.” Natural gas demand grows 15% in the Aurora scenario, with the fuel used to balance renewables in the power sector and replace oil for petrochemical production.