Despite Growing Sales of Electric Vehicles, Global Oil Demand to Remain Strong: COMMENTARY

Despite Advancement of Electric Vehicles, Global Oil Demand to Remain Strong cover image v3

As electric vehicles (EVs) charge down the road to becoming more popular, many assume EVs will let us leave large amounts of our oil consumption in the rearview mirror. Yet, contrary to common belief, the latest findings reveal that the increasing popularity of EVs won't result in growing global oil consumption levels to run out of gas anytime soon.

A new commentary by Goehring & Rozencwajg Associates examines the challenges the EV sector has faced thus far and how their adoption has affected oil consumption levels in Norway, a country where 80% of cars sold are fully electric.

What does it all mean for global oil markets? According to the authors, oil demand will remain strong for many years to come despite the advancement of EVs worldwide.

Below is a summary of their findings in note form.

Commentary: Highlights

• Since the mid-2010s, investors have increasingly believed in a rapid rise in EV adoption, leading to predictions that it would significantly reduce global oil consumption. Many believed that by 2019, oil demand would reach its peak and begin to fall. Today, global demand should reach another record high of ~103 million barrels per day (bpd) in 2024, roughly 2.3 million bpd higher than 2019.

• Norway is frequently highlighted by policymakers as a model for EV success, with EVs constituting 80% of new car sales in 2022 and representing 20% of the country's total car fleet largely as a result of significant subsidies. While this is seen as a blueprint for developed nations, a detailed examination of Norway's case reveals substantial challenges associated with EV adoption that fail to displace significant amounts of global oil consumption.

• Norwegian EV sales have not affected oil demand by any significant amount. Despite 20% of all vehicles on the road being fully electric, the country's diesel and gasoline demand fell by just 4%.

• Norway has successfully cut its CO2 emissions by 16% by transitioning from fossil fuels to electricity since 2010, a move widely praised in the media. Comparatively, the United States also achieved a 16% reduction in emissions over the same period, but rather by substituting coal with natural gas for power production.

• Global energy demand will consistently exceed expectations for the next twenty years, largely due to the rapid energy-intensive development of emerging market economies.

The World Needs More Canadian Oil & Gas

global oil demand to grow by 2 million barrels per day in 2024, according to Wood Mackenzie

Goehring & Rozencwajg are not the only ones who have studied EVs' effect on oil consumption.

Analysis by Visual Capitalist shows that annual plug-in sales are expected to rise to 20.6 million in 2025, displacing more than 2.46 million bpd of oil consumption globally [2].

Another recent industry energy outlook suggests that if every new passenger car sold globally in 2035 were an electric vehicle, oil demand in 2050 would still be 85 million bpd, the same as it was around 2010 [3].

It is important that we have balanced conversations about global oil and natural gas demand and what role Canada has in global energy markets as one of the most stable, responsible, and reliable suppliers on the planet.

We can support all forms of Canadian energy technologies – EVs, carbon capture, oil, natural gas, hydro, wind, solar, geothermal, ammonia, hydrogen, and nuclear – for the benefit of our families, Indigenous communities, and the global environment. It is incredibly important we don't prematurely transition away from the oil and natural gas sector for several reasons, one being the economic fallout that would devastate families and governments across the country.

Current demand projections by the IEA, Wood Mackenzie, S&P Global, and others suggest oil consumption will continue to grow for many years despite the advancement of EVs into many economies worldwide. As long as the world needs oil and gas, Canada's responsible and reliable producers should be the last "out of the pool."

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