Oil execs eye future with less demand

ELECTRIC VEHICLES

executives said Thursday.

The rise of electric vehicles, along with drastically reduced costs for wind and solar-powered sources of energy, has caused some to ponder whether oil demand could begin to shrivel in the next 10 to 15 years.

“I think it’s a real risk that we have to look at,” Robert Johnston, the CEO of Eurasia An electric vehicle charging station. The rise of electrics has the oil industry looking at plateauing fuel demand. Group, said at an industry event in Calgary.

For years, Canada’s oil producers were almost exclusively focused on growth, as roaring Chinese demand sent prices well above the US$100 threshold.

But stubbornly low oil prices since the middle of 2014 have spurred a drastic rethink in Canada’s embattled oilpatch, where heavyoil producers are fighting to remain among the industry’s lowest-cost operators. Canadian companies overseeing high-cost developments now have to contend with the possibility of a market that is no longer growing.

“‘Peak demand’ is not the right term,” Johnston said. “But the implications of demand plateauing would be very significant for high-cost producers.”

“I believe fundamentally that oil and oilsands can absolutely be a part of a lowcarbon economy. That’s a technological question.”

He said it was “absolutely inevitable” that the world begins to move toward a lower carbon economy through policy measures like carbon taxes or cap-and-trade programs.

Market observers are torn over the direction of oil demand in coming years. Many see demand continuing to grow despite a rapid shift toward renewable energy sources, as rising populations in countries like India, Nigeria and Ethiopia offset carbon reduction efforts in the Western world.

Until recently, The International Energy Agency had maintained that oil demand would grow steadily until 2040. However, last week the agency said it was preparing to review its demand outlook following announcements by India and China to incentivize electric vehicle adoption.

Jeffrey Harris, the founder of Global Reserve Group LLC, points out that only about one million vehicles on the road today are electric vehicles or hybrid, out of a total of roughly one billion. That total is expected to grow as the populations of developing nations rise.

“It’s probably not for 10-plus years before we’ll even begin to see a meaningful dent in gasoline consumption,” he said at the event.