How oil's stranglehold may be eroded
A new report from IHS Markit looks at the combination of the rise of electric vehicles, autonomy and "mobility as a service" trends such as ride-sharing — factors that will erode oil's stranglehold on transportation fuels by 2040.
One possible future: Add it all up and you have a "convergence of technological, political, and economic forces could fundamentally alter the automotive ecosystem." They summarize some of the findings in a blog post, and here are a few key points:
- "By 2040, oil will still be a big business but will have lost its monopoly as a transport fuel. Gasoline and diesel demand from cars will peak in the mid-2020s, although the growth of hybrid vehicles, which will still have a gasoline engine, will temper the demand slowdown."
- "More stringent fuel economy and emission standards, rather than EVs, will have the most significant impact on slowing oil demand."
- By 2040, vehicle miles traveled will have grown 65% to 11 billion miles per year in China, India, Europe and the U.S. (the major markets they analyzed for the report).
- Again, no peak: But given the various factors affecting global oil demand, their baseline scenario forecasts a "plateau" in global oil demand by 2040 at around 115 million barrels per day, but not a peak per se.
Why it matters: The report is another data point as policymakers and analysts try and gauge the future of oil demand and mobility.
Yes, but: Their outlook for EV's is more pessimistic than what another consultancy, Bloomberg New Energy Finance, has predicted. IHS sees EVs accounting for over 30% of new vehicle sales in the big markets they looked at.
- In contrast, BNEF sees electric vehicles comprising 54% of new vehicle sales in 2040.
Go deeper: The Houston Chronicle has a detailed piece on the new report here.