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Page added on April 2, 2018

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Peak Oil Demand Is Approaching Thanks to EVs and Autonomous Vehicles

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Nearly a decade ago, I talked about the concept of “peak oil.” Simply put, this theory states that global oil production will hit a maximum level before declining.

When oil prices hit a record high of $147 a barrel in July 2008, many analysts focused on the supply-demand equation and the topic of peak oil. Back then, peak oil pertained to supply.

People saw out-of-control global demand as a sign that the supply would peak… before it would run completely dry.

But then the introduction of hydraulic fracking and horizontal drilling blew the peak oil argument right out of the picture. So much new supply has been developed over the last decade due to fracking, and the U.S. is now the world’s top crude producer.

Fast-forward to 2018. The introduction of electric vehicles is close to its tipping point.

When that happens, EVs will quickly become the dominant vehicles offered for purchase at car dealerships around the world.

And that means we will approach “peak oil” once again. But this time the concept is entirely different…

This time, peak oil is all about demand. With the introduction of EVs, we’ll slowly start to see a reduction in the demand for gasoline and diesel.

And that means a reduction in the demand for crude. That will have far-reaching ramifications for the oil industry.

In BP’s latest Energy Outlook, the oil giant sees crude demand slowing and then plateauing in the late 2030s.

In this scenario, BP expects 190 million EVs in circulation by 2035. That’s almost double what it predicted in last year’s Energy Outlook.

And by 2040, 320 million of the 2 billion cars on the road worldwide will be EVs, according to BP’s projections.

That’s a hundredfold increase over today’s EV numbers.

But that’s only part of the story. By 2040, autonomous vehicles will also be widespread – and most of them will be EVs.

Today, EVs are racking up only about 2% of all passenger vehicle miles. Fast-forward to 2040: EVs will account for at least 30% of passenger miles.

BP thinks oil will peak around 18.7 million barrels per day and finally start declining by the end of the next decade.

Personally, I believe the peak will be lower and the decline will begin sooner…

This is according to Fessler’s Second Law of Technology: “When it comes to technology, change happens much faster than anyone expects it will.”

For a precedent, all you have to do is think about is how rapidly mobile phones have become widespread. It took a decade or less for half the world’s population to have phones in their pockets.

So why would the widespread adoption of EVs take any longer? Battery pack energy densities are rapidly increasing and their costs are rapidly dropping. I think we could hit the new “peak oil” by 2025.

I think half the vehicles on our planet’s highways could be EVs by 2040. That would bring down crude demand much faster than what the current projections expect.

Still, some oil executives continue to kid themselves. Most notably, the CEO of Saudi Aramco.

Amin Nasser doesn’t see EVs as a threat for at least several decades.

Royal Dutch Shell, meanwhile, seems to be getting the message. It’s increasingly focused on natural gas and is moving away from oil. French oil giant Total is doing the same.

The exact date of “the new peak oil” isn’t easy to predict. The important thing is that it’s coming. Sooner than many think.

That’s my opinion. What’s yours? Share your thoughts in the comments section below.

Good investing,


56 Comments on "Peak Oil Demand Is Approaching Thanks to EVs and Autonomous Vehicles"

  1. Davy on Tue, 3rd Apr 2018 4:20 am 

    Here is some Gaullism in action for the nedernazi.

    “France Risks War With Fellow NATO Member Turkey In Effort To Prop Up Syrian Rebels”

    “According to Reuters, France is looking to increase its military presence in Syria to help the U.S.-backed coalition in its so-called fight against ISIS. France has warned that a planned Turkish assault on these U.S.-backed Kurdish forces in Manbij would be “unacceptable,” according to a presidential source. On Thursday of last week (incidentally, the same day as Donald Trump’s surprise announcement), French President Emmanuel Macron met with a Syrian Democratic Forces (SDF) delegation that included the YPG militia, which Turkey has expressly designated a terrorist entity. According to Reuters, a senior Kurdish official said Macron had promised to send more troops to the area as part of the U.S.-backed coalition’s efforts and, in essence, to present a buffer between the Kurds and Turkey.”

  2. Go Speed Racer on Tue, 3rd Apr 2018 5:16 am 

    Nobody wants oil anymore.
    Because of anonymous cars and
    electric vehicles.

    And solar sails. And Yogurt farms.
    And singing kumbaya around a campfire.

    Hey oil companies! Everybody stop
    drilling. Nobody wants oil anymore.

  3. Norman Pagett on Tue, 3rd Apr 2018 5:24 am 

    some seriously odd thoughts above.

    why should the spread of EVs be any different to the spread of phones?

    Because WE carry phones around

    EV’s are meant to carry us around

    I would have thought that the weight differential and purpose would be blindingly obvious

    In any event, it’s not the journey that’s the problem, it’s the purpose of the journey. We use vehicles for employment, if there’s no oil to drive our industrial system, then conventional employment will decline and we will have no reason to go anywhere

    The EV isnt just a matter of putting a battery on wheels.

  4. rockman on Tue, 3rd Apr 2018 8:44 am 

    Racer – “Hey oil companies! Everybody stop drilling. Nobody wants oil anymore.” Yep, same sad joke they keep repeating. They have to keep focusing on projections decades into the future because the current reality of almost a hundred fold greater sale of ICE’s over EV’s doesn’t provide much joy.

    Why $billions in lottery tickets are bought/pissed away every year. That fantasy future is so much happier then their current lives. LOL.

  5. Kenz300 on Tue, 3rd Apr 2018 10:17 am 

    It is time to ditch new investments in oil unless you want expensive stranded assets.

    The world is going electric.

    Clean energy production with wind and solar combined with battery storage.

    Clean energy consumption with electric vehicles. Less noise and No emissions.

  6. BobInget on Wed, 4th Apr 2018 12:48 pm 

    So far EV’s make up 2.5% of world-wide sales.
    8.7 Million ICE trucks sold last yr.
    6.3 Million ICE cars sold 2017
    (fewer then 200,000 EV’s)

    Trans ocean shipping alone consumes majority
    of low grade fuels.

    Oh. I’ve owned a VW e Golf now for two years.
    best car owned in 65 years of driving.

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