oil demand

EV growth and oil demand

June 7, 2024 By EarthWise Leave a Comment

There has been lots of talk recently about the transition to electric vehicles sputtering out. Several automakers have delayed their EV programs citing reduced demand for the vehicles and lack of profitability. In the bigger picture, the auto industry as a whole is in a rough patch as rising interest rates and other factors have reduced car buying.

Despite all this doom and gloom talk, sales of electric vehicles will hit an all-time high this year. Adoption of EVs is accelerating more quickly than many people expected and government policies in China, the United States, and Europe have had a significant impact on vehicle sales. In China, 37% of new cars sold last year were electric. The country hit its 2025 target three years early and this year the figure could hit 45%.

But even as electric car sales rapidly increase, oil demand has continued to climb, reaching 100 million barrels a day, slightly more than it was before the COVID-19 pandemic. The International Energy Agency expects that oil demand will peak before the end of this decade, but oil consumption could remain strong for decades unless there is further policy action encouraging the transition away from it.

Some experts say that the IEA’s models don’t take into account how quickly the world is changing. New emission rules are expected to speed the adoption of EVs and plug-in hybrids. In addition, falling battery costs are making the economics of electric vehicles increasingly attractive. If EV adoption accelerates more rapidly than these models predict, then oil consumption could drop much more quickly.

However, the oil industry is deeply embedded in modern life and is not likely to fade away without a fight.

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EV Sales Are Taking Off. Why Is Oil Demand Still Climbing?

Photo, posted September 9, 2020, courtesy of Chris Yarzab via Flickr.

Earth Wise is a production of WAMC Northeast Public Radio

Is Peak Oil Here? | Earth Wise

August 17, 2021 By EarthWise Leave a Comment

For many years there has been talk of “peak oil”, the point at which rising world oil consumption would peak and then start declining. Some analysts have been predicting that this could happen by the 2030s. But the coronavirus pandemic drove a 9% slump in oil demand in 2020 that some economists are saying might never be entirely reversed.

There are three major forces driving down the world’s appetite for oil: decarbonization of economies to meet the goals of the Paris climate agreement, declining demand for oil as renewable energy sources and electric vehicles are increasingly adopted, and detoxification as cities act to curb particulates and emissions from burning petroleum.

The largest single factor is electric vehicles. Automobiles currently consume almost half of the world’s oil. As of the end of 2020, there were an estimated 10 million electric cars as well as more than 600,000 electric buses and trucks. This is still less than 1% of all vehicles, but 5% of all new cars being bought are now electric and the number is growing rapidly. Experts estimate that nearly a quarter of global car sales will be electric vehicles by 2025 and many car manufacturers are promising to sell only electric cars within the next 10 years.

The decline in oil demand is pretty much inevitable at this point. The main question is how quickly it will happen. Road transport makes up 48% of global oil demand, petrochemicals account for 14%, aviation 7%, and shipping 6%. Ultimately all these things are likely to diminish over time.

Only time will tell, but the long-awaited arrival of peak oil may already have happened.

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Amid Troubles for Fossil Fuels, Has the Era of ‘Peak Oil’ Arrived?

Photo, posted April 14, 2019, courtesy of Tony Webster via Flickr.

Earth Wise is a production of WAMC Northeast Public Radio.

Vehicle Electrification On The Rise | Earth Wise

August 21, 2020 By EarthWise Leave a Comment

Nearly 70% of U.S. oil consumption is for transportation and transportation accounts for 28% of the country’s greenhouse gas emissions. Therefore, technology improvements in transportation that can reduce emissions are a key element of combating climate change. The highest impact strategy is the electrification of the transportation sector, and it is definitely accelerating.

Demand for electric vehicles is growing for multiple reasons. These include long-term cost savings, tax incentives, declining battery costs, and greater environmental awareness. This year, about 2.7 percent of global passenger vehicle sales will be for electric vehicles. It is still a fairly small number, but that number is growing rapidly. It is expected to be 10% in 2025, 28% in 2030, and more than half of all vehicle sales by 2040. By that year, more than 30% of passenger vehicles on the road worldwide will be electric. The numbers for electric buses, delivery vans and trucks, mopeds, scooters, and motorcycles are expected to be even higher.

The environmental impact of electrification will be significant in reducing carbon emissions and pollution in general. Electric vehicles already reduce oil demand by a million barrels a day. By the year 2040, they will displace nearly 18 million barrels of oil a day and reduce CO2 emissions by 2.5 billion tons per year.

Electric cars still face challenges. They are still more expensive than gas-powered cars, but their cost-benefit analysis is changing rapidly as technology improvements and volume efficiencies drive down the cost of battery packs. Analysts predict that electric vehicles will achieve price parity with internal combustion vehicles in as soon as two years but in any case within the next ten years.

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Electrification of transportation sector nears tipping point

Photo, posted May 7, 2020, courtesy of Mark Vletter via Flickr.

Earth Wise is a production of WAMC Northeast Public Radio.