Note: Today’s post is part of our ‘Editor’s Picks’ series in which we highlight recent posts from our sponsors that provide supply chain insights and advice. This article is from GEP and examines the impact of the electric vehicle boom on the oil and gas market.
The growing popularity of electric vehicles (EVs) is not only reducing diesel and gasoline consumption in the transport sector, but also impacting oil and gas exploration and production activities.
Sales of electric vehicles grew exponentially throughout 2021 and are expected to follow the same trajectory in 2022, according to the International Energy Agency (IEA).
Around 2 million electric vehicles were sold in the first quarter of 2022, an increase of 75% compared to the first quarter of 2021.
The transport sector is a major consumer of petroleum products such as diesel and gasoline and accounts for nearly 60% of global demand. In the United States, approximately 67% of petroleum products are consumed by the transportation sector. In 2021, gasoline consumption was 8.8 million bpd, or about 44% of total oil consumption in the United States.
Impact of electric vehicles on the oil and gas market
The growing popularity of electric vehicles is expected to decrease global oil demand in the near future.
According to IEA data, around 16.5 million electric cars were sold in 2021 worldwide, an increase of 43.5% compared to 2018.
China is the largest market for electric vehicles and accounted for 7.5 million sales, followed by Europe with 5.5 million sales, while the United States accounted for 2.5 million sales during of the same period.
Norwegian oil refiner Equinor ASA predicts a destructive 47% drop in global oil market demand between 2018 and 2050.
The move towards sustainability is also a key driver for increasing electric vehicle sales across the world. This market phenomenon is also likely to result in an energy transition in the near future. However, 76% of O&G executives surveyed suggest that a rise in oil prices above $60/bbl should also accelerate the energy transition.
As a result, major economies have set ambitious targets for electric vehicles. For example, the US government is looking to increase the share of electric vehicles in new car sales to 50% by the end of 2030. the same period.
The VE wave
The growing popularity of electric vehicles among vehicle buyers is expected to limit the sales of internal combustion engine vehicles in the global market, which will directly hamper the demand for oil and gas products.
According to the China Passenger Car Association (CPCA), vehicle production at the Tesla Giga factory in Shanghai exceeded 322,000 units (up 66% year-on-year) in the first seven months of 2022. .
Additionally, US automaker Ford expects 40% of its global sales to come from battery-electric vehicles by 2030.
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