Peak oil demand is expected to come around 2036 as electric vehicles and autonomous vehicles are expected to play an increasingly important role in the world’s transportation sector, the Financial Times reported on Monday, quoting a long-term energy outlook by Wood Mackenzie.
“Autonomous electric vehicles or robo-taxis will really change the face of transport in the coming decades,” Ed Rawle, Wood Mackenzie’s head of crude oil research, told the FT.
According to the UK energy consultancy, autonomous EVs and robo taxis will become commercial by 2030 and gain wide acceptance by 2035. Each autonomous EV is forecast to displace more of the oil demand than the conventional EV, according to Woodmac.
“They will be on the road far more as they are autonomous, displacing a disproportionate amount of oil-based transport,” the FT quoted Rawle as saying.
Over the next ten years, the biggest curb on oil demand will be fuel efficiency, and gasoline demand is seen as the first oil-based fuel to reach its peak—at around 2030, according to Wood Mackenzie.
Other sources of oil demand, including petrochemicals, will grow stronger than gasoline demand, the analysts say.
Many companies, including Saudi Aramco, are betting on petrochemicals to secure long-term demand for its crude oil. Related: Chinese Oil Demand Growth Could Slow Down Soon
Aramco, however, says that there is no “impending peak demand”, and that “global oil demand will continue to grow and that oil will maintain its preeminence in the global energy mix for the foreseeable future.”
But European oil majors have started to project in recent years that the world is likely to reach peak oil demand within two decades, or probably earlier, and have started to incorporate those projections in their ‘energy transition’ scenarios.
BP, for example, expects peak oil demand in the 2030s, with EVs at around a third of the car market. Equinor expects that peak oil demand could come around 2030 at 111 million bpd in the current market as road transport electrification and efficiency gains in all sectors offset increasing petrochemical and aviation growth.
By Tsvetana Paraskova for Oilprice.com
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Global oil consumption is projected to hit 100 million barrels a day (mbd) next year rising to 120 mbd by 2040 and accounting for 33% of global primary energy consumption in 2040 as it did in 2017 despite rising global oil production and consumption.
Transport and electricity generation are the two biggest sectors in the global primary energy consumption accounting for 30% and 40% respectively.
It is debatable as to whether a peak oil demand could be reached during the 21st century. The one certain thing is that oil is expected to remain the world’s primary energy source throughout the 21st century and probably far beyond. A major underpinning factor is the growing world population.
Still, oil demand growth could be projected to decelerate a bit on the back of efficiency improvements driven by technological developments, a tightening of energy policies and a relatively low (albeit increasing) penetration of EVs and AEVs.
Oil will continue to be used extensively in the global petrochemical industry and other industries and outlets from pharmaceuticals to plastics, aviation and computers to agriculture and also in transport in most of the developing countries.
And whilst experts around the world project the advent of the post-oil era within the next fifty years, the realities of the situation cast doubt on their projections.
Some experts are now saying that widespread EV use could spell the end of oil. The tipping point, they reckon, is 50 million EVs on the roads. This they believe could be reached by 2024. However, 50 million EVs could hardly make a dent on the global demand for oil let alone replace it.
Currently, electric and hybrid cars combined number under 2 million cars out of 1.477 billion internal combustion engines (ICEs) on the roads worldwide, or a negligible 0.14%. This is despite large government subsidies.
The total number of ICEs is projected to reach 2.0 bn by 2025 rising to 2.79 bn by 2040 according to US Research.
Bringing 50 million EVs will reduce the global oil demand by only 0.9 billion barrels (bb), or 3.4%. A tipping point for oil could only be reached once 739 million EVs (50% of the current global number of ICEs) are on the roads worldwide within the next fifty years. This is impossible to achieve within that time frame.
Moreover, there will be a need for trillions of dollars of investment to expand the global electricity generation capacity in order to accommodate the extra electricity needed to recharge 50 million EVs.
Oil will continue to reign supreme through the 21st century and maybe far beyond. A post-oil era is a myth and so is peak oil demand.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London