Barclays commodities analysts have estimated that oil consummation will take major dive in the coming years due to the proliferation of electric and increasingly fuel efficient vehicles. A research note released on Wednesday estimated that there will be a decrease in at least 3.5 million barrels a day by 2025 as a direct result of these new automotive trends. That’s the rough equivalent of Iran’s daily output of 3.8 million barrels a day.
Some industry insiders and futurists are predicting that electric vehicles will make up one-third of the car market by 2040- in that event it would result in a demand reduction of 9 million barrels a day. That is equal to nearly 90 percent of Saudi Arabia’s daily output.
Exacerbating this trend is the world’s top automotive markets which have proposed banning or reducing the use of traditional fossil fuel burning vehicles. This includes European giants such as France, Germany, and the UK, in addition to top growth markets such as China and India.
At least one lawmaker in California, San Francisco Democrat Phil Ting, has plans to introduce a bill that would ban the sale of cars powered by an internal-combustion engines after the year 2040. Ting commented, “The market is moving this way. The entire world is moving this way. At some point you need to set a goal and put a line in the sand.”
Full electric vehicle adoption still has multiple barriers to overcome. Some consumers are concerned by the price and range of currently available electric vehicles. However, the demand for zero-emission vehicles is on the rise. Electric vehicle pioneer Tesla has aggressively expanded the range of their vehicles and is on the cusp of bringing their most affordable model yet, the Model 3 at a $35,000 price range, to market.
Additionally, Tesla is set to unveil the first ever consumer-available all-electric semi-truck at the end of the month. Currently the trucking industry consumes an average of 54 billion gallons of fuel a year in the United States.
Global sales of electric vehicles rose by 40 percent last year, although the nearly 2 million of them that are currently on the road still only account for less than 0.2 percent of the global fleet of light-duty vehicles, according to a report by the International Energy Agency.
Article written by HEI contributor Kevin Abbott.