Most lifestyle improvements of the past decades have been facilitated in some way or another by hydrocarbons. From long-haul transport and refrigerated goods, to medical equipment and telecommunication devices, all the way to home heating and electricity generation have been made possible by reworking the hydrocarbon molecules into the myriad of usable products. Along the years, not just have hydrocarbons helped upgrade our standard of living, but they have become an integral part of our lifestyle. We have become increasingly attached to hydrocarbons, and particularly crude oil.
Crude oil is part of most things we conveniently use daily. The uptake of oil in consumption took off in the period post 1965 as global economies expanded. It passed the 30Mb/d mark in 1965 and nearly doubled within a decade. The pace of the uptake has not been matched since. From 1980 onward consumption grew more steadily as economic development reached developing and underdeveloped nations. It passed the 70Mb/d mark in late 1990s and it has settled in the range of 90Mb/d in after 2010. The declining number of additional barrels consumed daily can be interpreted as maturing demand for crude oil, which opens speculation about peak-oil demand.
The first aspect which needs clarification is what does peak-oil mean? Peak-oil is a hypothetical point in time when crude oil consumption attains structurally a maximum level, thereat demand will gradually decline.
The second aspect which needs to be explained is the supporting evidence which sustains the peak oil debate. Two aspects are emphasized: the decoupling of GDP from energy consumption (and crude oil respectively) and the shift in the paradigm of oil market functioning.
Decoupling of GDP from energy consumption
The first piece of evidence signaling a structural is the decoupling of energy consumption from global GDP. Since 1990, the average annual GDP growth was 2.8% while average energy growth in consumption was 0.6% and crude oil 1.5%. The gap between the two indicators, which used to follow each other prior to the fall of the Soviet block, grew wider. The decoupling of economic value from the energy used to generate it, is also reflected in the energy intensity of the global economy which came down 30% from 7.5 MJ/$2011 ppp GDP in 1990. The main reasons for the decoupling are associated with structural removal of inefficient energy consumers from the market, fuel switch and the adoption of energy efficiency measures. As the map below depicts the aggregate energy intensity figure conceals a disproportionate reality (both by country and by fuel).
Shift in the paradigm of energy market functioning
Three energy market paradigms have been challenged: (i) energy sources and markets operated separated from each other; (ii) the business model based on long-term investments was disproved; and (iii) technological development can be disruptive.
For decades, the energy sector and commodity markets operated dislocated from each other. In oil markets, investments required long-term financing, predictable off-take volumes underlined by a wide spanning production curve of conventional assets. That has changed with the emergence of the US shale which reduced financing needs because of shortened production cycle.
The US shale revolution shook up another oil industry paradigm, that technology in this conservative industry can be disruptive. Technological innovation in the oil and gas exploration and production has generally followed an incremental path. It emerged from an existing techological solution into another following procedural upgrade. The learning curve of fracking showed how quickly alternative exploration and production techniques can take off, backed by the prospect of sufficient returns.
Peak oil demand to 2040
The decoupling of crude oil consumption from GDP is a gross indication that global economies are close to demand maturity. Further inroads into energy efficiency as well as fuel switch will absorb most of the increased demand in peripheral markets. An additional limits to growth will come from the paradigms shifts that have settled into the oil markets, especially the financing aspect of short-cycle oil production. Given the legacy it is safe to say that further expansion of oil consumption will not stop, only largely decelerate.
If oil market circumstances were to stay put, the discussion about peak oil would not yet be opened. What the peak oil debate builds on, aside from the mentioned legacies, are changes in at the structure of oil demand with permanent downward consequences. They are:
B. Efficiency gains reinforced by slow economic growth
C. Crude oil substitution in heavy transport and chemical industry
Academics, consultancies, policymakers and industry participants are splitting hairs about the magnitude and impact of each of the three potential developments. There is yet no consensus, but some common ground is evident from their assumptions.
A. Electric vehicle penetration.  Status quo numbers 2million electric vehicles on the road, most of which are in Asia. If the electric vehicle fleet were to increase by 1million vehicles/yr to 2040, most of which would take place in OECD countries, and battery price falls below $100/kwh then peak oil demand can be expected between 2025 and 2030. Transport accounts for more than 65% of crude oil consumption meaning that any change in the sector’s demand can have a large impact in absolute terms.
B. Efficiency gains reinforced by slow economic growth.  The IMF has been revising downwards the global economic growth projection 5-times-in-a-row. This is to say that the 3% posted figure that currently circulates in economic models is short lived, and expected to be replaced by a less promising prospect. Considering 3% as a starting point and compounded by energy efficiency gains consequent to tough regulatory standards, could bring demand for oil to peak soon after 2025.
C. Crude oil substitution in heavy transport and chemical industry. Natural gas, a hydrocarbon energy and feedstock resource more abundant than crude oil, whose price has been pegged to a basket of oil-products is gradually breaking free. Benefiting from a larger resource pool, a freely traded gas would be structurally cheaper than the oil-indexed volumes. US produced gas is a case in point as the US hub marker Henry Hub trades at a structurally lower price than the European hubs which partly trade oil-indexed contracts.
Feedstock and industrial oil consumption represents about 25% of the global oil demand. A switch from naphtha (crude oil derived feedstock) to ethane (natural gas derived feedstock) is contingent to the ethane-naphtha spread. In case gas remains at an advantage for a prolonged period it can lock-in a structural effect which plateaus oil demand around 2025.
After browsing over the main qualitative and quantitative estimates for global peak oil demand it is apparent that the peak is near. In the narratives presented, each development has been analyzed individually but synergies, for example, between efficiency and substitution could emerge and generate exponential effects. Additionally, the impact of pricing, not just of oil, but alternative energy sources and technology, are important considerations where one can only speculate looking towards 2040.
Despite the uncertainties that such an exercise surfaces, a few implications are undeniable.
a. Adaptation to a new demand environment will cause business models to change.
b. Resource competitiveness maximization will shift the positioning of market shareholders along the supply curve. Effects will be visible in their investment focus, oil versus gas portfolio optimization and non-fossil fuel diversification.
c. (hydrocarbon) Resource rich nations will favor domestic interests and national development. This can contribute to geopolitical shifts in managing the transition and create new avenues for collaboration.
Overall, there are multiple avenues that could lead to peak oil before 2040 but demand for the hydrocarbon resource will continue to remains between 70 and 80Mb/d. Global economies remain attached to crude oil for at least three decades on, particularly in oil producing countries. The effectiveness of policies aimed to reduce oil demand is contingent on their socio-economic impact.
 Electric vehicle fleet translates mostly into passenger cars and a small share of heavy transport. Plug-in hybrid trains are not included in the analysis, although they could be more disruptive than electric trains only.
 Regulatory standards are reflective of vehicle fuel consumption, which are considered to halve current fuel use. The most impactful fuel consumption curtailment would be on passenge vehicles, but heavy dusty trucking would make up a significant share of the absolute fuel use curtailment.