Fuel for thought – Driving Demand
From E&P Mirabaud Energy research
11 October 2017
There is a certain inevitability about peak oil, the world is changing and so too is our energy mix. However, exactly when that tectonic shift away from oil will occur, and what aftershocks that will ultimately have, remains up for debate. At present, electric vehicles make up less than 0.2% of all road vehicles, but if growth in uptake continues at the current level – 60% in 2015 – then, according to some commentators, peak oil could become a reality as early as 2023. Clearly there are other factors at play, but given that transport currently drives 56% of demand (of which roughly half is attributable to passenger vehicles), innovations in transportation will play a key role in the future oil demand story. Whilst we see this exponential growth in EVs as certainly bullish for battery manufacturers and their suppliers, we believe that the outlook is not as bearish for the oil producers as some commentators might suggest. Although electric vehicles are likely to contribute to the decline of oil demand in the coming decades, unless great leaps in affordability are made, they are unlikely to be the biggest threat to oil demand in the near term. Transportation will diversify, but not by enough to offset the 23.7m bopd declines in production from conventional crude oil fields expected by 2025. As such, the continuing need for industry investment in new oil supplies will likely underpin oil prices for some time to come.
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