Global Oil De­mand to With­stand Rise of Elec­tric Ve­hi­cles

Iran News - - INTERNATIONAL -

LONDON (Dis­patches) - Global oil de­mand will fall only mod­estly along­side the ex­pected rise in elec­tric ve­hi­cles over the next two decades, with con­sump­tion in petro­chem­i­cals and other trans­porta­tion still grow­ing, the In­ter­na­tional En­ergy Agency said on Tues­day.

Oil is al­ready fac­ing stiff com­pe­ti­tion from ever-cheaper and more en­vi­ron­men­tally friendly en­ergy sources as tra­di­tional fos­sil fuel users switch to cleaner, low-car­bon al­ter­na­tives.

In its World En­ergy Out­look 2018, the Paris-based IEA said it had cut its longert­erm oil price pro­jec­tions from last year, partly be­cause of the fall­ing cost of both re­new­able and con­ven­tional sources of en­ergy, the world­wide push to tackle cli­mate change and im­prove air qual­ity and the boom in U.S. shale oil and gas out­put.

Un­der the IEA’s “New Poli­cies Sce­nario”, based on ex­ist­ing leg­is­la­tion and an­nounced pol­icy in­ten­tions rel­a­tive to emis­sions and cli­mate change, the oil price should con­tinue to rise to­wards $83 a bar­rel by the mid-2020s.

The oil mar­ket should be able to find a longer-term equi­lib­rium, with the oil price in a range of $50-70 a bar­rel, the agency said.

The IEA es­ti­mates that there will be 50 mil­lion elec­tric ve­hi­cles on the road by 2025 and 300 mil­lion by 2040, from closer to 2 mil­lion now. How­ever, this is ex­pected to cut only 2.5 mil­lion bar­rels per day (bpd), or about 2 per­cent, off global oil de­mand by that time.

“It’s quite spec­tac­u­lar, be­cause you’re go­ing to see the num­ber of cars on the road (glob­ally) dou­ble from 1 bil­lion to 2 bil­lion, thanks to elec­tric ve­hi­cles and fuel econ­omy stan­dards,” said Laura Cozzi, head of the En­ergy De­mand Out­look di­vi­sion.

“Many com­men­ta­tors say we are writ­ing the obit­u­ary for oil de­mand ... it is cer­tainly true in the pas­sen­ger car seg­ment and in power gen­er­a­tion, but it is not true in the other two ele­ments of oil de­mand: trans­porta­tion and petro­chem­i­cals.”

Power gen­er­a­tion will move in­creas­ingly away from re­ly­ing on coal and crude oil, with re­new­ables tak­ing a much larger pro­por­tion of the global en­ergy mix.

Be­tween 2017 and 2040 the IEA es­ti­mates that more so­lar power ca­pac­ity will be added glob­ally each year than any other source of en­ergy, with an an­nual av­er­age in­crease of nearly 70 gi­gawatts.

“These changes brighten the prospects for af­ford­able, sus­tain­able en­ergy and re­quire a reap­praisal of ap­proaches to en­ergy se­cu­rity,” the agency said.

“There are many pos­si­ble path­ways ahead and many po­ten­tial pit­falls if govern­ments or in­dus­try mis­read the signs of change.”

The largest dis­rup­tive force on the sup­ply front will be the United States, the IEA said.

The United States will look set to estab­lish it­self as the “undis­puted leader” in crude and gas pro­duc­tion by 2040 thanks to surg­ing growth in shale oil, which has proved more re­silient to the low-price en­vi­ron­ment than most mar­ket ob­servers ex­pected, the IEA said.

“We are now wit­ness­ing a pe­riod of ex­pan­sion in U.S. oil and gas pro­duc­tion that matches or ex­ceeds any historical records ever achieved by the oil and gas in­dus­try,” said Tim Gould, head of the En­ergy Sup­ply Out­look di­vi­sion.

The IEA es­ti­mates that U.S. crude oil is ex­pected to rise un­til reach­ing a peak in the 2020s of about 17 mil­lion bpd.

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