The rise of electric cars and electric powered trucks would primarily be the reason that the global demand for crude would most probably hit a “plateau” in the later part of 2030s. This was predicted by BP in its annual outlook for the global oil market.
IN comparison to about 2 million electric vehicles in 2016, about 320 million would be on the roads according to BP’s predictions. The use of electric vehicles would be greater after 2035 after hitting a tipping point before that.
A significant shift for demand in oil is reflected in the prediction. It also reflects the manner in which the thinking in the energy market has changed.
In comparison to this thinking, people used to worry about whether oil production can meet demand just about a decade ago. And the price of oil at $147 a barrel was driven by those concerns. And there is much more oil now that there is appetite for it in the world. in fact, OPEC and Russia have bene forced to reduce production because of excess of oil supply especially from U.S. shale industry.
A wide range of scenarios were considered in the outlook predicted by BP. The prediction assumes that government policies, technology and societal preference develop the same way as it has done in the past in its “evolving transition” scenario which is the central focus of the report.
There is a difference however in the thinking of the future for oil by OPEC compared to what BP forecast of a “plateauing” of global demand for oil by 2040. The oil cartel believes that there would be rising demand for oil till 2040. This prediction was made by it in November.
But “strong competition from other energy sources”, energy efficiency, rising oil prices and slower economic growth would be the factors for a steady deceleration of oil demand according to OPEC.
Within the next 15 years, the peak for oil demand could be reached, according to prediction from another oil giant, Royal Dutch Shell.
“The key takeaway is no one has any idea. It’s impossible to pin down when we’re going to reach peak oil demand,” said Matt Smith, director of commodity research at ClipperData.
The way the auto industry would change would be the major factor. Auto is the major consumer of the oil industry.
In recent years, there has been a rise in the sale of electric vehicles by companies such as Tesla and the Chevrolet Bolt. But according to the International Energy Agency, just 0.2 per cent of the total passenger vehicles is composed of by electric vehicles.
But high goals for sale of electric vehicles have been set by automakers such as Ford, Volkswagen and Honda. A partial ban on internal combustion engine in Europe has helped companies to set such high aims.
In the last year, the attitude of BP towards electric cars has become more bullish.
(Adapted from Money.cnn.com)