Impact of EVs on world oil demand will not be huge

Impact of EVs on world oil demand will not be huge

BAKU, Azerbaijan, July 30

By Leman Zeynalova – Trend:

Impact of electric vehicles (EVs) on world oil demand will not be huge, Francis Perrin, Senior Fellow at the Policy Center for the New South (PCNS, Rabat) and at the French Institute for International and Strategic Affairs (IRIS, Paris) told Trend.

He noted that the use of electric vehicles (EVs) is growing at a very fast rate.

“According to the consultancy Wood Mackenzie 5 million EVs were on the road throughout the world at the end of 2018 and sales of EVs were estimated at 2.2 million in 2019. 2020 will not be a very good year due to the Covid 19 crisis and the world economic crisis. A very fast growth rate but so far a small share of the world car market (1.2 billion vehicles at end 2018),” said the expert.

Perrin noted that in a long-term perspective EVs will go on developing very fast due to government policies linked to the fight against climate change; technological progress which will lower the prices of EVs as compared with those of ICE (internal combustion engines) vehicles fuelled by motor fuels derived from oil (gasoline and diesel fuel); and increasing awareness from consumers.

“Forecasts are always very difficult but some credible sources (energy companies or consultants) think that there could be about 300-400 million EVs by 2040.

According to ExxonMobil, for every additional 100 million EVs on the road world liquids demand could fall by 1.2 million barrels per day in 2040. This means that, if the forecasts indicated above are correct, world liquids demand could fall by 3.6-4.8 million b/d by 2040. According to Wood Mackenzie EVs could displace about 5 to 6 million b/d of oil (gasoline and diesel) by 2040,” said Perrin.

He pointed out that world oil demand reached 100 million b/d in 2019. “It will of course fall in 2020 but this evolution is not the consequence of the development of EVs but of the world economic crisis linked to the Covid 19 pandemic. World oil demand could fall to about 90 million b/d this year.”

Perrin said that in the long term EVs will take a growing market share of the world car market and then displace part of gasoline and diesel demand, as explained above.

“But oil is not only consumed by car drivers. Petroleum fuels are also used in trucks, planes and ships and, outside the transport sector, in the petrochemical industry and some other industries. The rise of EVs will not threaten the use of oil in these different sectors. Moreover world population will increase by about 2 billion people between now and 2050; and developing and emerging countries will go on consuming more oil for some time,” he said.

Taking into account all these trends the impact of EVs on world oil demand will not be huge, the expert believes.

“ExxonMobil thinks that world oil demand will grow at least until 2040 even if we take into account a considerable increase of the use of EVs in the next 20 years. Some other industry sources or specialized consultants think that oil demand could reach a peak around 2025 or around 2030. Some of them think that oil demand could fall from 2025 onwards or 2030 or 2035 or 2040... And it is true that these forecasts or projections are surrounded by a lot of uncertainties,” said Perrin.

He pointed out that in any case the rise of EVs will not make oil disappear from the world energy scene.

“When we speak about EVs we are speaking about cars and oil is not only about cars but about cars plus trucks plus planes plus ships plus petrochemicals plus some other industrial uses. If the international community really wanted to chase oil out of the world energy market in a long-term perspective it would need EVs plus biofuels plus natural gas as a motor fuel plus hydrogen and not only EVs.”


Follow the author on Twitter: @Lyaman_Zeyn

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