Energy

What Explains the Growing Divide Between Oil and Gas | Switched On

Bloomberg Podcasts
Bloomberg Podcasts•Jun 4, 2026

Why It Matters

Understanding the distinct oil‑gas trajectories helps investors, policymakers, and energy firms allocate capital toward technologies that truly enable a 2050 net‑zero world, avoiding stranded assets and misaligned climate strategies.

Key Takeaways

  • •Oil demand peaks 2029, then declines across scenarios
  • •Gas demand rises in economic scenario, falls sharply in net‑zero
  • •Net‑zero scenario assumes realistic tech rollout, not magic‑wand
  • •Electric vehicles drive oil decline; gas remains bridging fuel
  • •Model updates raise projected warming to 1.81°C by 2050

Summary

The BloombergNEF New Energy Outlook (NEO) 2024 examines how the global energy system will evolve amid rising electricity demand, geopolitical tensions, and climate ambitions. It outlines two primary pathways: the Economic Transition Scenario (ETS), which reflects market‑driven outcomes with limited policy intervention, and the Net‑Zero Scenario (NZS), which assumes maximal, yet realistic, effort to meet a 2050 net‑zero target.

In the ETS, oil demand is projected to peak around 2029 and then enter a gradual decline, driven primarily by the rapid adoption of electric vehicles. Gas, however, follows a different trajectory: demand grows about 29% through 2050, positioning gas as a bridge fuel that displaces oil and coal in power generation. By contrast, the NZS sees gas demand peak by 2029 and then fall roughly 3% annually, ending 44% below today’s levels, while oil demand falls even more sharply, ending at less than half of ETS levels.

Ian Bryman highlights that the NZS incorporates a “maximal effort” definition, grounding assumptions in current supply‑chain constraints and technology readiness. This means technologies such as carbon capture, utilization, and storage (CCUS) or small modular reactors are phased in gradually from the 2030s, rather than appearing instantly. The updated climate modeling also nudges projected warming from 1.75°C to 1.81°C (67% likelihood), reflecting more accurate aerosol and agricultural emission assumptions.

These divergent pathways underscore that while market forces alone may reduce oil consumption, achieving net‑zero will require deliberate policy and realistic technology scaling, especially to curb gas use. Stakeholders must recognize gas’s dual role as both a transitional asset and a potential obstacle to deep decarbonization.

Original Description

Gas and oil are on a sharply divergent path. In BloombergNEF’s Economic Transition Scenario, oil demand peaks before the end of the decade, while gas demand continues to grow as expanding power systems seek reliable sources of generation. At the same time, constraints on everything from gas turbine supply chains to grid infrastructure are emerging as critical bottlenecks. So how does the global energy system evolve from here, and what do these competing pressures reveal about what lies ahead for the energy transition? On today’s show, Tom Rowlands-Rees is joined by Ian Berryman, BloombergNEF’s head of energy systems modeling, to discuss findings from the New Energy Outlook 2026.
Complementary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEFGO on the Bloomberg Terminal or on bnef.com (https://www.bnef.com/)
Links to research notes from this episode:
See omnystudio.com/listener (https://omnystudio.com/listener) for privacy information.
The future of energy, transport, sustainability and more, as told by BNEF analysts. Each week, Dana Perkins and Tom Rowlands-Rees sit down with BloombergNEF (BNEF) analysts to uncover the key findings and stories behind their latest research.
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