Peak oil

 From The Driven

Back before the Global Financial Crisis, and long before Covid, people were concerned about Peak Oil – when it would become too expensive to pump the remaining reserves of oil out of the ground and, of course, there would be a global economic crash.

Well, technology saved the world (only for greed to give us the GFC and we had a crash anyway) and more attainable reserves were also found. Why am I raking over old coals?

It seems we may be moving, although very slowly, to another sort of Peak Oil – peak oil demand. Bloomberg Green has recently published figures quoting the rise of EVs and the amount of oil they are currently displacing from the market.

“In the first quarter of 2010, 395 EVs were sold worldwide. Last quarter, more than 1.7 million were sold — of those, more than 935,000 sold in Asia,” Bloomberg says.

“In 1Q 2010, you would have needed three decimal places to show EVs as a percentage of global passenger vehicle sales (0.002%). Last quarter, the decimals hardly mattered: EVs were 10.8% of sales, an order of magnitude increase in little more than four years since passing 1% in the second quarter of 2017.”

There are almost 1.5 billion cars on the road in 2022 according to market analysis firm Hedges and Company, and today’s new ICE cars last longer, burning fossil fuels for decades. Global oil demand looks good at the moment, but is it secure? 

EVs of all types (including buses and two- or three-wheelers) have been displacing more than a million barrels of oil demand each day, according to BloombergNEF study earlier this year.

EVs could reduce oil demand by 21 million barrels per day by the middle of the century, compared to a global car fleet powered completely by internal combustion engines.

In a survey conducted by BNEF in 2019 a significant number of respondents said that they expected peak oil demand to occur sometime between 2025 and 2030. How things have changed! Increasing demand for energy in all its forms has sent the price of oil up and the expectations of peak oil demand to the next decade.

What actually happens will depend on many factors, especially the speed with which we decarbonise the transport sector. I still believe that it will be much faster than anyone is expecting, with the growth rate of EV uptake now heading towards 100% year-on-year.

We should see the sales of passenger electric vehicles doubling or more each year. I am looking forward to the numbers which should be out by the end of the month. I am expecting sales to have topped 6 million cars.

N.B. logarithmic scale
Note December peak, January slump each year.