Rethinking the Role of Oil in the Era of Renewable Energy
In a bold statement, Haitham Al-Ghais, the secretary-general of the Organization of the Petroleum Exporting Countries, dismisses the idea of completely ditching oil in favor of renewable energy sources as “wrong” and “unrealistic.”
Al-Ghais argues that oil is deeply intertwined with the production of renewable energy, such as wind turbines and solar panels, as their manufacturing processes rely on oil products. With oil currently making up 31 percent of the global energy mix, he asserts that it remains the “lifeblood of modern life” and will continue to play a crucial role in international markets for years to come.
Highlighting the advantages of oil in extraction, refining, and transportation processes, Al-Ghais emphasizes its pivotal status in the global economy since its discovery.
The Integral Role of Oil in Daily Activities
Al-Ghais further elaborates on the essential role of oil in various daily activities worldwide, including transportation, travel, energy production, and manufacturing. He points out the challenges associated with completely phasing out oil, given its significant presence across diverse locations, nationalities, and professions.
Amin H. Nasser, the President and CEO of Aramco, echoes the need for a realistic energy transition pathway that includes oil and gas. Speaking at CERAWeek 2024 in Houston, Texas, Nasser criticizes the current transition strategy for failing to displace hydrocarbons at scale.
He calls for abandoning the idea of phasing out oil and gas, emphasizing the importance of investing in them adequately. Nasser advocates for reducing carbon emissions, improving efficiency, and introducing lower carbon solutions when they are ready and economically competitive.
Strong Growth in Global Oil Demand Expected
The Organization of the Petroleum Exporting Countries predicts strong growth in global oil demand in 2024 and 2025, driven by robust economic activities in China. World oil demand is projected to rise by 2.25 million barrels per day in 2024 and by 1.85 million bpd in 2025.
OPEC attributes the expected growth to continued robust economic activity in China, global air travel recovery, and healthy petrochemical feedstock requirements. The report also highlights ongoing improvements in airline activities and robust road mobility supporting the demand for jet oil, kerosene, and gasoline.