The International Energy Agency (IEA) predicts crude oil production growth will slow to near-zero by 2028. OPEC, the cartel of mostly Middle Eastern oil-producing countries, disagrees. Some history lessons give us a clue as to which party is probably correct.

The answer will have a huge impact on how to invest for income in the years ahead…

Energy experts have a terrible track record for predicting when crude oil production and demand will peak and then start to decline. This chart shows how oil production continued to grow through previous predictions that it would peak in 2005, 2010, and 2020.

In June, the International Energy Agency issued a new outlook that sees oil use for transport declining after 2026, and total demand growth flattening by 2028. At the same time, the IEA increased its 2023 forecast for this year from 2.4 million barrels per day to 102.3 million b/d. The previous prediction had been for 2.2 million b/d.

In contrast to the IEA’s outlook, at a conference on July 10, the OPEC Secretary General predicted that global demand for all forms of energy would rise by 23% by 2045.

New renewable energy cannot provide the needed growth for the next two decades. This chart shows that from 2009 to 2019, renewable energy’s share of total energy consumption increased by just 2.5%.

Humanity has an insatiable thirst for energy. Developing nations use, on a per capita basis, a fraction of what the developed countries consume. For the developing nations to raise their standard of living, energy consumption will increase by multiples of their current levels.

My point is that forecasts of declining hydrocarbon (oil and natural gas) production in the next decade are almost certainly wrong. The push by governments to replace these energy sources with renewable energy will not work. The planet will consume all energy produced from renewable or hydrocarbon sources and there will still be a need for more.

The push to renewable energy has throttled investment to find new sources of oil and gas. There will be supply and demand imbalances that will push up the price of crude oil. Energy sector stocks should be long-term winners.

To invest, you can go with the full spectrum, upstream-to-refining, companies like Exxon Mobil (XOM) and Chevron Corp (CVX).

For my newsletter subscribers, I like to recommend the best stocks in the different energy sectors of upstream, midstream, and downstream.