EIA Annual Energy Outlook: BullishSeems there is quite a chasm between those predicting the end of oil in a couple of years, and those that believe that oil will be continued to be used for decades.
In the most recent Annual Energy Outlook, March 16, 2023, the EIA has acknowledges the impact of the IRA on an accellerated electric infrastructure transformation, and the great strides that will made in in EV adoption.
Despite this, their striking prediction is that in the base case, oil demand in the US will decline by only 2.1% relative to 2022, even after including the effect of billions of dollars in subsidies directed at alternative clean energy and EVs.
https://www.eia.gov/outlooks/aeo/pdf/AEO2023_Release_Presentation.pdf It also predicts US production to be flat through to 2050, and will continue to be a big oil and gas exporter to the rest of the world even as there are more and more EVs in use in the US, as well as efficiency gains that lower domestic consumption.
Because both export demand for liquid fuels and consumption of liquid fuels in the U.S. industrial sector increase, total petroleum and other liquids production remains relatively flat across the projection period in all cases from 2022 to 2050 (Figure 4). In all four cases, industrial use of petroleum and liquid fuels grows 26% to 28% over the same period, rising to about 7 million barrels per day (b/d) by the end of the projection period. By 2050, the transportation sector consumes about 12 million b/d of liquid fuels—about 9% to 10% less than in 2022—in part, because more fuel-efficient vehicle models and electric vehicles are in use. https://www.eia.gov/outlooks/aeo/IIF_IRA/ With the universe of overwhelming data to sift through at their disposal, including that of the YouTube EV gurus, upcoming anti ICE legislation, and after accounting for all the recent great strides towards an accellerated transition in the US and OECD countries, the EIA agency's forecasts again reconfirm that there will be continued demand and consumption of petroleum products well into the future for the rest of our lifetimes.
While some take the position that the sky is falling on oil, and I am always glad to see any information that may not support my belief, until I see hard actual evidence that runs contrary to this strong outlook on a global basis, I will continue to agree with the agency's forecast, economic headwinds notwithstanding. Are they right? Well, historicaly they have been right more than they have been wrong.
As for me, I see clarity going forward on increasing near term oil demand with global decreasing oil supply, along with ever growing higher oil prices. Indexed to inflation, oil is still historically very cheap.
After another decade, the crystal ball gets cloudy. Fortunately, unlike real estate or many other investments, one can always get out with a few keystrokes should you change their mind.
In the meantime, the push pull going on now in the oil markets is offering tremendous trading opportunities on the sidelines of a core position. I am enjoying the churn.