Opec: Cars to drive oil demand growth

paris — The outlook looks bright for oil-producing nations and carmakers, Opec said Tuesday, as the group expects a surge in car ownership in the developing world to far outweigh the adoption of electric vehicles over the coming two decades.

In its annual look at long-term developments likely to affect the energy market, Opec said it expects growth in the global economy to be centred in developing nations, which will in turn spark a boom in car ownership.

The World Oil Outlook 2040 report estimates the size of the global economy to be 226 per cent that of 2016, with developing countries accounting for three-quarters of the growth.

With their increasing income, people in developing nations are expected to splurge on cars, tripling their number on the road in the region to 1.2 billion.

And while the Opec report expects electric vehicles to make inroads in the market, it doesn’t expect them to drive out traditional internal combustion engines just yet. “It can be concluded that the velocity of technical advances has accelerated substantially with the introduction of (battery electric vehicles), which are now considered a serious alternative to traditional gasoline and diesel passenger cars.”

However, Opec noted that advances in internal combustion engines has also made them more efficient.

“It is expected that gasoline engines will retain their economic advantage for the build-up of new fleets in developing countries, while diesel will remain the main mover for commercial vehicles,” said the Opec report.

Opec expects the added vehicles in developing nations to create an additional 12.2 million barrels per day in oil demand.

That estimate takes into account increased efficiency measures and the adoption of electric vehicles in China and India. Otherwise, growth in oil demand would have been more than double. — AFP