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ExxonMobil has said global oil demand will remain virtually unchanged by 2050 and warned that any move to curtail investment in fossil fuels would trigger a new energy price shock.
In a forecast released on Monday, the US supermajor said oil demand would stay above 100mn barrels a day over the next 25 years — a forecast that assumes an energy transition will fail to curb the world’s thirst for fossil fuels.
Exxon warned of a new global oil shock if companies failed to keep investing to match that demand, saying crude prices could quadruple as supply fell.
Exxon’s prediction contrasts sharply with UK oil major BP, which expects oil consumption to decline to 75mn b/d in 2050. The International Energy Agency projects oil demand would fall to 54.8mn b/d if governments met their climate pledges on time.
The Texas oil company’s forecast comes amid an increasingly fraught debate between fossil fuel producers trying to defend their market and, policymakers and climate scientists who warn of dangerous global warming unless consumers rapidly curb burning of fossil fuels.
Exxon has long argued the world will need more of its oil to lift billions of people in the developing world out of poverty. But it faces lawsuits from environmentalists and policymakers in California, who argue Exxon deceived the public for decades about how the burning of fossil fuels was warming the planet.
The forecast comes three years after Exxon lost one of Wall Street’s most memorable proxy shareholder battles against activist investor Engine No. 1, which argued the supermajor faced an “existential business risk” by pinning its future on fossil fuels. This year Exxon sued activist investors who filed shareholder proposals demanding it to do more to tackle climate change.
Despite continuing strong demand for oil and gas, Exxon forecast that carbon emissions would decline by 25 per cent by 2050 due to greater energy efficiency, the rollout of technologies such as carbon capture and renewables.
However, this is significantly below the emissions cuts needed to meet the net zero goals outlined in the 2015 Paris Agreement on climate change.
In June the Paris-based IEA, which represents rich-world consumers, warned the world faced a “staggering” surplus of oil by the end of the decade if producers kept raising output as the world turned away from fossil fuels.
The Opec producer cartel described the IEA’s forecast as “dangerous commentary” and stuck to its own forecasts for oil demand to reach 116mn barrels of oil by 2045.
Exxon’s report said oil and gas would remain essential to the global economy as population growth drove a 15 per cent increase in total energy use by 2050.
While the need for oil to make gasoline for passenger cars would fall by a quarter by 2050, Exxon predicted, demand from industry — the biggest source of consumption — would compensate.
Exxon uses the forecasts contained in its global outlook to help determine its future production growth plans, which are among the most bullish in the oil industry and include expansions of projects from Texas’s shale to offshore Guyana.
Environmental campaigners said Exxon’s forecast represented a last-ditch effort from a dying industry to appeal to investors to support new production.
“There is no long-term future and only material risk in oil expansion since governments worldwide and financial institutions have committed to an energy transition,” said Hannah Saggau, senior climate finance campaigner at Stand.earth, an environmental organisation.