IEA doubts electric cars will end oil age

An electric car is seen while being charged © Jorge Silva
The International Energy Agency (IEA) says it’s not likely electric cars could cause oil demand to peak anytime soon.

According to the agency’s Executive Director Fatih Birol, it is trucks, aviation and the petrochemical industry that drive oil demand growth, and not cars. “We don’t have major alternatives to oil products there. I don’t buy the argument that electric cars alone will cause a peak in oil demand at least in the short and medium-term,” Birol said at the Energy for Tomorrow conference in Paris.

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The number of electric vehicles on the roads has risen six fold since 2014, the IEA said. 550,000 new plug-in cars were sold last year. Electric vehicles made up less than one percent of all new cars sold in 2015.

Analysts have been warning about the potential threat of electric cars for the oil industry.

Fitch Ratings agency said last month if recent technology trends continue the electric car revolution may drive oil into an ‘investor death spiral.’ According to Bloomberg New Energy Finance, the multitrillion dollar ‘big crash’ could start as soon as 2023.

Analysts from BHP Billiton called 2017 the year when “the electric car revolution really gets started.” According to them, 140 million cars on the road will be electric by 2035, displacing 2.3 million barrels of oil per day.

Oil demand will peak in the 2020s and then the industry will start to shrink, according to Statoil Chief Executive Eldar Saetre.

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Royal Dutch Shell also forecasts oil demand to peak in as little as five years while renewable energy and disruptive technologies gain traction. “We’ve long been of the opinion that demand will peak before supply,” said Simon Henry, Chief Financial Officer for Shell. “And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport,” he added.