The adoption of electric vehicles (EVs) could lead to global peak oil demand as soon as 2023, which will result in oil prices crashing to $10, Chris Watling, CEO & chief market strategist at Longview Economics, told CNBC on Friday.
Watling said he didn't see oil crashing "in the next few weeks or months, or maybe even quarters, but I think the long-term outlook for oil-because of what's happening in terms of electric vehicles" with 70 percent of oil used for transportation, is oil plummeting to $10 somewhere around 2023-2025.
"We used to talk about peak oil in terms of supply, we now need to talk about peak oil in terms of demand," Watling added. China is on an aggressive push to EVs adoption, and the analyst thinks that "often new economies, emerging economies, adopt new technologies first, because they don't have the old infrastructure that they have to keep servicing."
The key catalyst for the oil market next year would be Saudi Aramco's planned IPO-the biggest initial public offering ever-Watling agreed, and added "Well, I think they need to get it away quick before oil goes to $10."
For next year, the International Energy Agency (IEA) expects the ongoing production gains from non-OPEC countries to probably act as a "the ceiling for aspirations of higher oil prices", despite the fact that now everyone acknowledges that the global oil market continues to make progress toward rebalancing.
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Of course, there are other views among experts and analysts, with Citi, for example, expecting tighter supply next year, regardless of what OPEC does. Several big OPEC members are already pumping at capacity, and even though some have plans to ramp up production, they may not have room for more, according to Citi's Ed Morse, the head of the bank's commodity research.
Oil trader Trafigura also begs to differ from the herd expecting "lower for longer" to continue for longer, or even forever. Trafigura's co-head of group market risk, Ben Luckock, said at a presentation at the conference, as carried by the Financial Times:
"We are nearing the end of 'lower for longer'."
By Tsvetana Paraskova for Oilprice.com
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Comments
Of course this will happen in the long-term, but short term there's no freaking way. Oil is going to go up over the next year.
How can you write about an oil price spike in 2020 on the 10th of October (link below) and then about oil prices to collapse to USD10 in 2023? Do you actually read what you write?
(http://oilprice.com/Latest-Energy-News/World-News/Supply-Crunch-To-Lead-To-Oil-Price-Spike-By-2020s-Expert-Says.html)
Looking at the projections from Exxon and Opec where they both project an insignificant market share of EVs in 2040 it seems pretty clear that they need this to be the case for the oil prices to be stable in the future.
It is true that EVs will increase the load on the electrical grid, but due to the efficiency of EVs this increased load is less than what most think.
Also keep in mind that the utility companies are struggling with flat electricity demand and they would love to see some growth.
EVs are much cheaper to run than ICE's and there is pretty much no maintenance. There is also time savings by not having to go to the gas station.... Their acceleration and performances is superior to ICE's. So I think there are good reasons to believe that in the next decade that EVs will pretty much take over.
This will have a dramatic impact on oil demand and prices. My money is on 10$ a barrel in the next decade at some point.... Will be very interesting see....
Electricity ? Our EV (Ioniq) consumes 1,25 kWh/10 km (~0,24kWh/mile), so the impact to our consumption of electricity is quite low. We calculated with 10 % increase when we got the car, but it's more like 8.
We have driven ~7500 km (4660 miles) without having to recharge it once on the road. Always at night, always at home. I got COO's for wind which costs me 0,02 SEK extra per kWh (0,0025 USD).
Will EV's change the need for oil and gas and the price ? Anyones guess is as good as mine.
We need a revolutionary change in battery technology and charging technology. As it stands now, it takes me 14+ hours to charge my Volt, just to run it 40-50 miles the next day. Level 2 charging could cut that down to 4 or 6 hours, but that's still too long. We need to be able to charge 100% in 1 hour or less.
Where do the EV's pull their power from? Hint...it is not a plug in the wall.
The answer is a few comments above:
"I got COO's for wind which costs me 0,02 SEK extra per kWh (0,0025 USD)."
Every five weeks, China deploys as many electric buses as the entire London bus fleet. Batteries got 26% cheaper last year and will get 18% cheaper this year. EVs are already 2.5x cheaper for fleet owners vs ICE, due to much longer lifespan and dramatically lower cost of ownership.
Robo fleets are going to take over and it would be possible to compete if you try to run fleets of ICE vehicles. That’s way too expensive and complicated. So much maintenance. Electricity is certain to get cheaper over time because of solar + storage bids at 2 cents and falling. You can’t possibly compete if you don’t run EVs.
I’d say 2022 but we have to adjust for the fact that with battery tech the most optimistic predictions are always too pessimistic.