Despite the fact that demand for oil cannot fluctuate drastically in a matter of days, oil prices do fluctuate considerably every day or every few days.
What if someone were to tell you that the demand for oil will stagnate as early as 2020? Would it mean that oil prices will then be more stable?
Are you driving a hybrid car today? One that tells you NOT to drive over 55 km per hour, else it will start the petrol engine? To those driving full-electric cars today, you may be changing the world for the better and the worse.
Better because the environment would be cleaner with lesser pollution. Worse for oil companies because you may be playing a part in making their lives even more difficult.
It was reported in the New Straits Times that within a decade, growth for oil demand will be halved beginning as early as 2020. It said that the prices of electric cars and renewable technology will weaken the demand for petrol.
The report gave many details but this is the most significant – electric cars will account for a third of road transport by 2035. The report was jointly issued by financial think tank Carbon Tracker and the Grantham Institute, both in London.
Oil and gas giant BP meanwhile predicted in its 2017 Energy Outlook that oil demand from cars would continue to rise well into the mid-2030s. By 2035, electric vehicles will only make up 6% of the global car fleet.
If this is so, then the demand for oil will still be very strong and all oil companies should continue to do well. (OR they can buy more renewable energy companies in preparation for that day).
Before we start debating on whether it’s around 30% or 6%, there’s another forecast which was issued by Bloomberg New Energy Finance.
It estimated that electric cars will account for 22% of the market share by 2035. This is still rather significant being three times higher than what BP predicted.
There are many articles online that show a significant number of drivers are already moving towards renewable energy.
So, perhaps a more likely scenario is that you will start to enjoy these electric cars when oil and gas companies also push for it, somehow in the future.
This article first appeared in kopiandproperty.com
Charles Tan blogs at property investment site kopiandproperty. He dislikes property speculators and disagrees that renting is better than buying. He thinks it’s either property or poverty. He is presently the CEO of an auction house auctioning assets beyond just properties.