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EV growth may force peak oil demand by 2035


Fast growth in electric vehicles (EVs) coupled with increased carpooling/sharing and autonomous driving may force peak oil demand by 2035, said the Bank of America Merrill Lynch (BofAML) in its latest research report Global Energy Weekly.

Even so, the incoming Trump Administration could well reverse some policies. An aggressive descaling of EPA’s (Environmental Protection Agency) fuel efficiency targets past 2020 coupled with reduced support to EVs may push peak oil demand back to 2050, the study said.

“For now in our oil demand forecast to 2022, we see consumption expanding by 1.1 million barrels per day (b/d) per annum on average, driven entirely by EMs. Our projections factor in a significant slowdown from the average annual 1.75 million b/d growth in 2015/16, as the transport demand effect of lower oil prices starts to fade,” said BofAML.

Oil demand should keep growing by 1.1 million b/d p.a. to 2022

The efficiency effect (i.e. car choice) of oil prices on oil demand growth is much more long-lasting compared to the transport effect (i.e. miles driven). The collapse in oil prices initially caused a shift in favour of larger and less fuel efficient cars like SUVs, from India to China to the US.

Yet, the overall effect of the initial price drop on oil demand growth may fade materially in two years as short-term transport effects wear off and only long-lasting efficiency effects remain. A major risk to the positive view on oil demand to 2022 comes from a possible reversal of globalization, as oil fuels trade and transport. DM demand may keep contracting on mandated efficiency policies already in place.

Net, an expected US oil demand drop is mitigated by new petchem plants starting up in 2017, but overall US demand still contracts on transport efficiency gains to 2022.

EM buyers like big cars – EM policymakers, not so much

Car penetration rates in EMs remains far behind DM peers, leaving plenty of room for transport demand to grow for decades to come. Also the share of SUV sales in India and China remains lower than in the US

Importantly, the EM shift in new cars sold toward SUVs started in 2010 long before prices collapsed, suggesting a strong consumer bias for large vehicles. Still, we see EM policymakers attempting to curb less efficient vehicles due to pollution and foreign fuel dependency fears.

“Over the medium term, we also expect EM demand to get a cyclical lift predominately from Brazil and Russia, both major oil producers, but we see a much more muted demand response from the Middle East,’ said the BofAML report.

Overall, about 69 per cent of global demand growth to 2022 comes from Emerging Asia, with oil producing regions including FSU, Middle East, and Latin America accounting only for 28 per cent of the growth compared to 41 per cent in 2010-14.

TradeArabia News Service


13 Comments on "EV growth may force peak oil demand by 2035"

  1. Jerry McManus on Sun, 12th Feb 2017 10:56 am 

    “Cancer growth may force life demand by 2035”

    There, fixed it.

  2. penury on Sun, 12th Feb 2017 11:46 am 

    If you start with an unreasonable conclusion and doctor your “facts” to support unreality you usually end up with a pile of horse dung. This is such a pile,

  3. Antius on Sun, 12th Feb 2017 12:01 pm 

    Trouble is, it has inferior range and performance compared to a petrol/diesel IC driven car. They will need a whole new set of infrastructure to support them. In western countries, if all road vehicles switch to electric, it will push up electricity demand by 50%. If we convert heating appliances to electric as well (heat pump for low temps, resistance heaters for high temp loads) we effectively double electricity demand. And that’s assuming no economic growth.

    How are we going to do all that with wind turbines? The answer is we won’t. Not unless there are far fewer of us.

  4. Plantagenet on Sun, 12th Feb 2017 12:21 pm 

    Its very difficult to project two decades into the future. The world may be completely different then. Go back two decades and people were predicted peak oil and oil shortages and skyrocketing gas prices and the collapse of civilization, such as it is.

    Look how those predictions turned out.


  5. Antius on Sun, 12th Feb 2017 12:52 pm 

    ‘Its very difficult to project two decades into the future. The world may be completely different then. Go back two decades and people were predicted peak oil and oil shortages and skyrocketing gas prices and the collapse of civilization, such as it is.
    Look how those predictions turned out.

    Yeah. Trouble is they were right.

  6. Anonymous on Sun, 12th Feb 2017 1:09 pm 

    Sorry ant, but EV’s do not ‘require a whole new set of infrastructure’. If you are referring to chargers, well, its entirely feasible to build those w/o any major difficulties. EVs are being designed and marketed and designed as drop-in replacements for oil-burners, IoW, they are intended to utilize everything we built for oil burners.

    The achilles heel of EVs is not that wed have to build chargers for them, or their ‘range’ even, their weakness is the idea of the 2.5 ton personal latte and grocery fetcher. Suburban sprawl, mandated car dependency, or mandated electric car dependency if you like. EV proponents like EVs because they are virtually identical to oil-burners in almost every respect, including the supporting infrastructure.

  7. Kenz300 on Sun, 12th Feb 2017 1:26 pm 

    The world is moving away from fossil fuels and toward clean energy.

    Clean energy production with solar panels / tiles and battery storage.
    Clean energy consumption with electric vehicles. No emissions.
    Sign me up. A new solar roof, battery storage, an electric car charger and a electric vehicle.
    Solar panels are now being projected to have a much longer life and lower cost than just a few years ago.

  8. Anonymous on Sun, 12th Feb 2017 1:33 pm 

    Nice mantra kenzbot. Yeah, get yourself a stand-alone or grid-tied system. Get a few acres of land, fill it with solar-panels to feed your tesla(screw food right, monsanto will take of that), and after you’ve done all that, STFU.

  9. onlooker on Sun, 12th Feb 2017 2:03 pm 

    Yes Kenz BOT STFU

  10. penury on Sun, 12th Feb 2017 3:26 pm 

    I presume that when people talk about EVs and other electronics the fervently believe that electricity will magically appear whenever and wherever it is desired.Just think no more use of scarce or polluting sources, just go electric.

  11. makati1 on Sun, 12th Feb 2017 4:36 pm 

    penury, belief is more important than thinking these days. The electric grid to power those many EVs is not in existence. The electric to power them comes from … hydrocarbons or nukes. There are going to be so many shocked believers when the 2X4 of reality smacks them in the face. When? Wish I knew, but as things are escalating, I doubt that it will be much longer.

  12. Kenz300 on Mon, 13th Feb 2017 1:28 pm 

    Wind and solar power generation keep growing every year while fossil fuels are in decline.

    Renewables Provide Majority of New US Generating Capacity through November 2016

    How Exxon & The Koch Brothers Have Funded Climate Denial – YouTube

  13. Boat on Mon, 13th Feb 2017 5:05 pm 


    FF are not in decline. Renewables minus hydro in the US are in single digets. .the god news is renewables will grow 1 percent per year of total electric use short term and even faster long term.

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