It won't be a case of oil running out, however. Rather, the world will become much more efficient in its use of energy. But in the next few years, Deutsche predicts, we will see a lot of volatility and even more chronic under-investment in production capacity.
"We expect increasingly chronic under-investment in new oil supply capacity," Deutsche says in its October 4 report entitled "The Peak Oil Market: Price Dynamics at the End of the Oil Age."
"We believe that concentration of remaining oil reserves into OPEC government hands will lead to under-investment in new supply and higher volatility in regulatory and fiscal regimes, and more volatile pricing," it adds.
The report notes that within OPEC, supply from Iran, Venezuela, Iraq and Nigeria declined between 2004 and 2008 even as market growth soared. "With the possible exception of Iraq, there is little prospect of any near-or medium-term growth from these massive reserves holders," it says.
"Consumer governments are adding to uncertainty with total lack of clarity on environmental legislation/regulation outcomes," the report says. "That deep uncertainty in supply and demand will likely disincentivize private sector oil supply investment, exacerbating overall oil under-investment, and leading to peak oil supply within the next six years. We see market maximum capacity at 90 million b/d in 2016--just 5% above 2009."
Deutsche believes that electric cars will have a much greater than expected positive impact on oil efficiency, which will rise to 44 miles per gallon by 2020 from about 29 mpg in 2009.
"The impact will be concentrated in US gasoline, the largest single element of global oil demand (12%), and will be dramatic enough in its own right to cause the peak of global oil demand around 2016," says Deutsche, which forecasts that US gasoline demand will fall by 46% to 4.9 million b/d by 2030.
In addition, big price discounts for natural gas will encourage a major switch from oil.
And then there is the Obama effect. "We believe Obama's environmental agenda, the bankruptcy of the US auto industry, the war in Iraq, and global oil supply challenges have dovetailed to spell the end of the oil era," it says.
By 2030, Deutsche suggests, the price of oil will be around $70/b and the market will have shrunk by 8% to 79 million b/d.
The International Energy Agency, which is due to publish its latest long-term forecasts on November 10, last year cut its estimate of world oil demand in 2030 by 10 million b/d to 106 million b/d.
Deutsche, meanwhile, sees refining as "a twilight business that will struggle mightily in a world of ever-declining gasoline demand," although it suggests that continued oil demand from agriculture, heavy transport and shipping may provide a future for "niche" refiners.
