Oil will be toppled as North America‘s primary energy source this year, according to risk management firm DNV GL, with natural gas and electrification set to reshape the region’s energy future.
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The Norway-headquartered firm said Monday that overall energy demand in the U.S. and Canada would continue to decline over the coming months, as improving efficiencies in the transport sector dramatically reduce North America’s reliance on oil.
“Energy efficiency is going to outpace the growth in GDP (gross domestic product), that’s the main reason why energy demand is peaking,” DNV GL’s group president and CEO Remi Eriksen told CNBC’s “Squawk Box Europe” on Monday.
“(And) there will be a massive change in technology in the transport sector, not only on the roads but also at sea,” he added.
In a separate report published Monday by DNV GL, the company said “natural gas is set to overtake oil as the region’s largest single energy source (this year) and remain the dominant source until 2050.”
DNV GL predicted overall energy demand in the U.S. and Canada would continue to shrink as the regional economy becomes less based on manufacturing and as electricity plays a greater role. This would eventually lead to energy demand falling 43 percent by 2050, it added.
The world’s largest oil firms have different views over the potential for an oil demand peak, but all say that even if demand peaks, trillions of dollars of investments in oil gas would be required to develop new barrels.
Earlier this year, Exxon Mobil — the world’s largest listed oil company — said oil demand could slip to around 78 million barrels per day if governments around the world decide to implement measures to curb the impact of climate change.
OPEC expects world oil consumption to reach 100 million barrels per day later this year, much sooner than previously forecast.
Meanwhile, the International Energy Agency (IEA) estimates oil demand could climb to 105 million barrels per day by 2040.
Brent crude traded at around $77.86 Monday morning, up more than 1.3 percent, while U.S. WTI stood at $68.43, around 1 percent higher.