Oil versus coil (electric). It’s the struggle that we will witness for the next 10 years or more. See how this will take shape below.
Globally, efforts are on full throttle to reduce reliance on oil in various industrial domains and the automobile sector is no exception. Enthused thanks to massive investments and stronger big brand support, the automotive industry is on track to becoming independent of oil sooner than later. Big automobile names like General Motors, Tesla, Nissan and Ford are putting in a lot of efforts to churn out eco-friendly electric vehicles.
Though this will not be a reality overnight or in couple of years time but as per the industry predictions, two decades down the line, fruitful results will start appearing in force.
According to a report by the Organization of the Petroleum Exporting Countries (OPEC), the car fleet is anticipated to change smoothly over the forecast period till 2040. In the passenger car segment, electric vehicles are predicted to represent nearly 12 per cent of the car fleet by 2040.
Will oil become outdated by 2040?
As per OPEC findings, the global number of passenger cars in 2016 was 1076 million and it will reach 1213 million and 1615 million in 2020 and 2030 respectively. While in 2040, it will be 2030 million, nearly double current figures.
Despite of this huge increase in the number of passenger cars to 2040, global oil demand of passenger cars will not see a very significant rise during the same period.
In 2016, global oil demand of passenger cars was 24.4 million barrels per day (mb/d). Whereas it is projected to reach 26.4 mb/d in 2040. In fact, compared to the current levels, the global oil demand of passenger cars will increase till 2025 to reach 26.7 mb/d but thereafter it will see a minor dip to 2040.
Rebalancing of oil market
The 2017 OPEC World Oil Outlook (WOO) was recently launched at the OPEC Secretariat in Vienna. Mohammad Sanusi Barkindo, OPEC Secretary General, said: “The past year has been an historic one for OPEC and the global oil industry. Since publication of the WOO 2016 in early November last year, the oil market has undergone fundamental changes. It has been a period where the rebalancing of the global oil market has gathered vital momentum, buoyed by a number of important factors.”
He reiterated the importance of the landmark ‘Declaration of Cooperation’ of 24 participating OPEC and non-OPEC nations in driving the rebalancing process, with the high conformity levels to the production adjustments evidence of the major commitment to restore sustainable oil market stability in a stable manner. He added that “we need to remember that the short-, medium- and long-terms are all intertwined”, which is underscored in the WOO 2017.
Primary energy demand to surge
The report highlighted that total primary energy demand is set to increase by 35 per cent in the period to 2040 and oil is expected to remain the fuel with the largest share in the energy mix throughout the forecast period to 2040.
While the long-term oil demand has been revised upward by 1.7 mb/d compared to the WOO 2016, with total demand at over 111 mb/d by 2040 and there is no expectation for peak oil demand over the forecast period to 2040.