Suncor CEO’s ‘Stark Prediction’ Has Off-Carbon Transition Driving Down Oil Demand

The CEO of Suncor Energy is admitting that the transition off carbon could hit crude oil demand as hard as the pandemic did, in what Reuters describes as a “stark prediction in an industry that frequently downplays the impact of electrification” on its future prospects.

“While Canadian oil and gas will remain a significant part of the global energy mix for some time, we have to take advantage of new opportunities that offer attractive growth prospects,” Mark Little writes in a post for Corporate Knights, co-authored with Alberta Innovates CEO Laura Kilcrease. “The temporary economic lockdown triggered by the 2020 pandemic is giving us a glimpse into a not-too-distant future where the transformation of our energy system could disrupt demand on a similar scale.”

But “disruption breeds opportunity, and forward-looking companies and countries will need to step up and lead.”

After a pandemic that drove global fuel demand down by about 30%, forcing Suncor to curtail its output and cut its dividend to investors by more than half, “Little called for federal investment to help the industry diversify into hydrogen, renewable jet fuel, and carbon fibre,” Reuters writes. That’s at a time when the fossil sector “faces mounting pressure from a growing number of investors who screen companies based on environmental, social, and governance guidelines.”

Little’s and Kilcrease’s post and Reuters’ summary appeared on the same day that Rystad Energy predicted that global oil demand this year will fall by 11.5%, from 99.5 to 88.1 million barrels per day. The Oslo-based analysts see demand for road fuels falling by 9.9%, jet fuel by 40.8%, total oil demand in the United States by 11.8%, and European demand by 15.6%. At this point in the pandemic recovery, Rystad expects most of that volume to return in 2021.