William Simpson
The world could have an oil glut by the end of the decade due to rising production combined with falling demand as consumers and businesses switch to electric vehicles and renewable energy, according to a new report from the International Agency power.
The International Energy Agency he said Wednesday that the world’s total oil supply capacity is expected to increase to about 114 million barrels per day by 2030, which the group said would equate to a “staggering” 8 million barrels per day beyond projected demand.
This kind of spare capacity has not been seen outside of the COVID-19 lockdowns of 2020, when economies around the world shut down as governments sought to stop the spread of the deadly virus, the IEA said. The extra capacity could have “significant consequences for oil markets” from the US to OPEC member countries such as Saudi Arabia and Kuwait, he added.
“The projections in this report, based on the most recent data, show a large supply surplus emerging this decade, suggesting that oil companies may want to ensure that their strategies and business plans are prepared for the changes that are occurring,” he said the AIE Executive Director, Fatih Birol, in a statement.
Among the drivers of increased oil supply are expectations that Americans and consumers in other developed countries will continue to switch to electric vehicles. Global EV sales could reach 40 million cars by 2030, with almost one in every two new cars projected to be EVs by then, the IEA predicted.
Could gas prices go down?
It is possible that an excess supply of oil could lead to a “lower price environment,” according to the IEA report. However, the analysis includes three projections for where oil prices could be in 2030, ranging from a maximum of more than $90 per barrel to a minimum of less than $60 per barrel within six years. Oil currently trades at around $82 a barrel.
Still, one expert warned against reading too much into the report.
“It’s a long-term perspective, so it could be very far away, or very close, but I’m a little more concerned about the slowdown in EV adoption and the huge costs for countries adopting EVs,” said Patrick De Haan, chief of oil. analysis on GasBuddy, told CBS MoneyWatch in an email.
Cheaper gas prices may not materialize until 2030 because some refineries have closed in the US and Europe, and there are fewer plans to build new facilities due to the shift to solar, wind and other renewable energy sources, he added.
“[T]The future is cloudy when it comes to this potential impact on gasoline prices,” De Haan said. “We will still need refineries for some time, and if they close during the transition, this could lead to gas prices rising over the long term. term. run.”
In the short term, drivers are getting some short-term relief as gasoline prices now they are falling across the country due to weaker demand and lower oil prices. The average price of regular unleaded gas in the U.S. was $3.44 per gallon on Monday, down about 9 cents from a week ago and 14 cents from a year ago. according to for AAA.
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