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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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Mass EV Adoption Could Lead To $10 Oil

Oil

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.

Related: Busting The Lithium Bubble Myth

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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  • Al on October 13 2017 said:
    $10 oil....not going to happen for a long time...that analyst may want to come back into this reality....more like $100 oil in the near future again...
  • snoopyloopy on October 13 2017 said:
    Hopefully, those economies that depend on oil to survive are paying attention and making serious moves to survive.
  • cowboybob on October 13 2017 said:
    Really? And were is All this free electricity going to come from?
  • Dan on October 13 2017 said:
    Where are the power plants for this electricity? California just turned down some . Can't get to C if you can't add A and B.
  • Willie on October 13 2017 said:
    So we are to believe in 6-7 years electric cars are going to jump from less than a percent to being everywhere. Where is all the raw materials for such vehicles going to be coming from and they better start building the infra structure now to supply all this electricity. I have land in Antarctica for sale also, If any one believes this Bull.
  • Crosby on October 13 2017 said:
    The only problem is global oil demand has been steadily increasing... Seems like a very unrealistic prediction
  • netdragon on October 13 2017 said:
    Sounds like someone got stuck with a bunch of short calls and wants to drive down the price and is feeding pessimistic stuff to reporters.

    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.
  • Kr55 on October 13 2017 said:
    $10 oil would lead to wells all around the world being shut in, and middle east countries collapsing and destroying each other. That price would not last for long.
  • Citizen Oil on October 13 2017 said:
    Another laughable extremist analyst view. China is already downplaying purchasing EV's as they don't have the power structure to keep up with EV charging requirements. I don't think anyone has thought this EV disruption out well. The costs will be enormous and the majority of people don't find the EV range appealing . Billions if not trillions will have to be spent on charging stations , windmills, nuclear plants, solar panels, etc. Not going to happen for decades to come, especially since most countries are virtually bankrupt. EV's are an amazing ideology whose practicality is poor right now.
  • Canadian eh on October 13 2017 said:
    ....and this is why economists always get it wrong. Rarely do their predictions take into account any real world issues. Its pretty obvious this guys is making his claims based on a bunch of headline grabbing predictions and pie in the sky extrapolations rather than on technical fundamentals. Electric market will certainly grow but the chances of it even keeping oil demand growth at bay in the next 10 years is highly unlikely. Lots of hurdles in scaling up the electric car market and the electric grid...and as has been mentioned we still have to get the electricity from somewhere. If not oil or coal then nat. gas. will be a big component of power generation. Renewable may be growing but they have a long long way to go and some big issues to overcome to produce on a scale to displace hydrocarbons in a meaningful way. I'll stand up and take notice of this kind of headline when its followed by some hard technical analysis to back up the claims. Until then I shall sleep.
  • James on October 13 2017 said:
    Thats what you call a SUPER pipe dream! Oil can crash to 10$ and then we'll see the most painful price spike the world has ever seen! People thinking that Elon "Elron" Musk will change the world and everything will be electric and unicorns need to step back into reality. Oil will dominate for 2-4 more decades.
  • DreadPirate on October 13 2017 said:
    $10 oil. We had that as recently as 1999 when the Saudis were determined to drive the price so low that OPEC would stop cheating (and it paid off in spades - oil was $140 bbl in 7 years). But only the biggest fool could believe $10 oil is coming again because of EVs. EVs can't compete at $50 bbl, let alone $10 bbl. Far easier to get rid of coal than oil, simply due to energy density. Physics and science matters. This joker is just as idiotic as that moron Matt Simons who was blowviating about Saudi production's "imminent collapse" and $200+bbl a decade ago.
  • 338WinMag on October 13 2017 said:
    This analyst might want to look at the EROEI on electric vehicles. EVs are envirofanaticism and enviromadness married together by government subsidies. Fossil fuel energy is a one time shot in the arm of the human race. There is no replacement for the solar energy stored in fossil fuel form over millennia. It irreplaceable by any form of green energy. Bull markets in energy for the future is a certainty.
  • Freeze.dried_mule on October 13 2017 said:
    Not going to happen with world consumption at almost 100 million barrels every single day! Market is distorted to the low side with gasoline being virtually the cheapest liquid you can buy in America......cheaper than bottled water. EVs and wind a tiny fraction of power used everyday.
  • oilprice_what? on October 13 2017 said:
    Dear Tsvetana Paraskova,

    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)
  • Optimst on October 14 2017 said:
    It is interesting how emotional this subject is.
    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....
  • John Scior on October 15 2017 said:
    It seems like an extremist conclusion but I believe the jist of the debate comes down to this : as oil becomes more difficult to find what will be the logical conclusion as to its replacement. We no longer light our homes by whale oil light it is done by electricity. Whenever rapid changes occur such as War that might disrupt supply chains, investments in alternatives increases. As supply chain interruptions dissipate , oil becomes the predominate transportation fuel once again. Brought about much discussion though with the headline of 10 oil - unlikely to happen though for some time.
  • Marcus Rönningås on October 15 2017 said:
    I havn't fueled any of my other cars since we got our EV some three months ago. I'm starting to doubt that we ever will fuel them before we change them all to EV's.

    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.
  • MikeInAZ on October 16 2017 said:
    2025 for an end date for oil demand? Doubtful. It will be another 20 years before there is mass adoption of EV. Too many people aren't believers in the technology. Too many people are waiting for 400+ mile range cars. What about work trucks, towing boats and trailers and toys?

    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.
  • Arthur on October 26 2017 said:
    So without using apps like turbo for car sharing. Even would need to cost for my parents about 2000 Euro if I produce electricity my self with PV which is cheaper than energy from companies, but I use bysicle instead of car - better for my body, environment and wallet. And by the way it would not be profitable to extract oil at 10$ and even electric cars used oil based products in batteries alone (life cycle of battery is much longer than fuel) It is possible that oil price won't drop so much even in long term cause they are going to close costly operations when demand will decrease which will make price stay quite high - nowhere near 10x drop in price. And lower fuel prices will slower adoption of EV's
  • Tom Cruise on November 03 2017 said:
    There shall come a time when crude oil is obsolete, nobody is using them, almost all oilfield abandoned and then the price shall be $1,000 a barrel.
  • Doug on November 06 2017 said:
    The question I have for this author is...

    Where do the EV's pull their power from? Hint...it is not a plug in the wall.
  • Marcus Rönningås on November 09 2017 said:
    @Doug
    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)."
  • R Tillerson on May 27 2018 said:
    Late 2021 is peak demand for oil.

    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.

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