Global demand for oil set to reach all-time high as electric vehicle adoption fails to curb consumption
PTC News Desk: The global appetite for oil is set to hit record highs this year as Battery electric vehicle (BEV) adoption, expected to make up over 10 per cent of global auto sales, failed to curb oil consumption. Oil sales are expected to grow by nearly 40 per cent.
According to a Morgan Stanley report, the disparity between the rise in electric vehicle sales and increased oil demand challenges conventional expectations.
Norway, which has the highest EV penetration rate in the world, is a compelling case study. Despite the fact that EVs account for 80% of new car sales, the country's oil consumption has not decreased.
Similar trends can be seen in China, the world's largest EV market, where oil demand has increased by 50% while EV penetration has surpassed 20%.
Many people overlook the fact that road transportation accounts for less than half of global oil consumption.
Contrary to popular belief, road transportation accounts for only a portion of total oil consumption. Jet fuel, petrochemicals, and industrial/residential heating all play a significant role in global oil demand.
According to the International Energy Agency (IEA), the petrochemical sector will be the primary driver of future oil demand. Demand for jet fuel is also expected to rise as airline travel returns to pre-pandemic levels.
Energy transitions take decades, and historical evidence shows that new technologies take time to gain dominance.
Currently, fossil fuels account for more than 80% of primary energy consumption, with solar and wind accounting for just over 5%.
Government policies promoting net-zero emissions and the use of cost-effective renewables will gradually shift this balance.
While oil's share of the energy mix has shrunk from 40% in 1965 to less than a third today, total energy consumption has more than tripled.
Predictions of a drop in oil demand are deemed overly pessimistic. Global oil demand is on track to set new highs by the end of the year, because of faster-than-expected global GDP growth and increased demand for jet fuel.