Not an April fool. Gasoline is back under a buck in many parts of the U.S.

The Oil Age has powered the world for well over a century. There have been two general schools of thought about how it will ultimately end.

There were those who believed that oil production would peak and begin to decline in the face of high global demand. This is essentially the peak oil argument, which many laymen mistakenly understand as “The world is running out of oil.” The argument wasn’t that the world was going to run out of oil, it was that oil production would begin a long decline and cause havoc in a world that is still highly dependent upon oil.

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This version of the end of oil became very popular just before the shale oil boom. The idea was neatly summarized in 2005 when the late Matt Simmons published Twilight in the Desert, in which he argued that oil production in Saudi Arabia was nearing terminal decline.

In this version, there is no easy replacement for oil, so oil prices skyrocket above $100 a barrel (bbl) as people seek to maintain mobility. In fact, for a while it looked like this version might play out.

But growing shale oil production largely burst that bubble in 2014, when it became clear that there was still a lot of oil to be produced.

Fast forward a few years, and a new version of the end of oil began to take hold. In this version, exponential increases in electric vehicles (EVs) and ridesharing are predicted to be two key factors that will make oil obsolete.

In this version, oil prices plunge as demand starts to fall. This is the exact opposite of the peak oil argument, where oil prices surge as supply starts to fall.

As Michael Liebreich, the founder and senior contributor of Bloomberg New Energy Finance, recently put it on Twitter TWTR: “I’ve always said the endgame for oil is not when it reaches $200/barrel, it’s when it settles at $20/barrel.” Many have argued that there will be a period of shortages and high prices, but ultimately a peak in demand that would lead to lower demand and then price collapse.

One thing the coronavirus (COVID-19) pandemic has done is to collapse oil demand, and subsequently prices. The world still needs oil during this crisis, but what we are seeing today is exactly what I think we would see in the peak demand scenario.

In that case, we will see the need for a much smaller oil industry. And that is likely where we are headed now, with oil prices in the $20s, and the timing of a recovery still uncertain.

I believe what we saw in the 2005-2014-time frame was a preview of the peak oil scenario. Oil company revenues were skyrocketing during this period, and energy stocks were one of the best-performing sectors.

But today, we are seeing a preview of the peak demand scenario. That outcome is very different. In this scenario, only the strongest oil companies survive, and the sector becomes one most investors would rather avoid.

Are we there yet?

I don’t think so, but it is hard to say what the lingering impact on oil demand will be from the coronavirus pandemic. When oil demand dropped during the 2008-2009 financial crisis, it bounced back strongly in 2010.

This pandemic seems destined to change our world in several ways, and some of those ways involve lower oil demand. If that transition starts to happen in earnest, then the peak demand scenario that was predicted to be around 2030 will be here a lot sooner than that.

The reality is that the world’s population is still growing at a very fast rate; and there is huge growth in the world’s middle class (with poverty being eliminated in many economies)! There will continue to be huge demand for home appliances and vehicles. At the same time technology is reducing energy consumption (increasing appliance and vehicle efficiency).

There will be a net increase in energy demand globally. Oil is NOT gone yet, but for sure, its ‘age’ is over while the world transitions (even at a slow pace) to other means of providing primary energy and energy conversion for basic human functions.

Yes, EV’s, ride sharing, more efficient lighting and home appliances – and greater investment in renewable energy are spelling the end of oil. Yes, there are challenges with new technologies. But the pathway is clear. This is going to happen. The health crisis today – is clear evidence of what a drop-in demand for oil will mean. This is a foreboding sign for oil! The world has changed.

This blog is provided by the “Supreme Dr. Ayatoilet Kh.Kh.Kh.” pen name and moniker with a passion to exposing the abuses of the regime in Iran and those outside Iran who also abuse Iranians. The “Ayatoilet” communicates via original blogs, videos, music compositions, comedy, novels, and animation movies that can be found on www.baharmedia.net and can be reached via email at ayatoilet@hotmail.com