Musk Goes Viral With Oil & Gas Tweet

The world's richest man and Tesla Inc. (NASDAQ: TSLA) founder Elon Musk has acknowledged that the world still needs oil and gas amid the ongoing global energy transition.

"Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble. One of the biggest challenges the world has ever faced is the transition to sustainable energy and to a sustainable economy," he said. "That will take some decades to complete," Musk told reporters at a conference in Norway on Monday.

Asked if Norway should continue to drill for oil and gas, Musk said: "I think some additional exploration is warranted at this time.'' Musk said offshore wind power generation in the North Sea, combined with stationary battery packs, ''... could provide a strong, sustainable energy source in winter. " 

Tesla is one of the most prominent electric vehicle makers on the planet, and EVs are playing an important role in mitigating climate change. 

According to an analysis by BloombergNEF, last year, EVs displaced 1.5 million barrels of oil per day. That might not seem like much against a backdrop of 100 million barrels global oil production. However, that number is expected to go up exponentially, with EVs on the road expected to nearly quadruple over the next four years to nearly 80 million from 20 million currently. Indeed, BNEF has forecast that electric and fuel cell vehicles will displace 21 million barrels per day in oil demand by 2050.

But as Musk has noted, the world's appetite for oil is not about to die out any time soon--quite the contrary. 

According to the latest report by the International Energy Agency (IEA), soaring oil use for power generation and gas-to-oil switching are currently boosting demand. World oil demand is now forecast at 99.7 mb/d in 2022 and 101.8 mb/d in 2023. The IEA says that world oil supply hit a post-pandemic high of 100.5 mb/d in July as maintenance wound down in the North Sea, Canada and Kazakhstan. OPEC+ ramped up total oil production by 530 kb/d in line with higher targets and non-OPEC+ rose by 870 kb/d. World oil supply is set to rise by a further 1 mb/d by year-end.

By Alex Kimani for Oilprice.com

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