Home News Commodities Forecasts for a serious drop in oil demand are heavily exaggerated

Forecasts for a serious drop in oil demand are heavily exaggerated

Oil demand

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The forecasts for a serious drop in oil demand are heavily exaggerated. Despite many analysts’ forecasts for a decline in raw material demand over the next 10 years, the data from current market statistics outlined a different picture. The low oil prices over the past three years have driven growth in traditional car sales. In addition, urbanization further increases the need for transport, which is still relying too much on fuel
The biggest enemy of the petroleum business are electric cars, but they are still a distant problem for the Organization of the Petroleum Exporting Countries. At present, the sales of electric cars account for only 2% of all, and their number is about 0.02% of all available vehicles. In other words, the nearly three million electric vehicles currently in operation replace the need for only 60,000 barrels of oil per day, or about 0.06% of world exports.
Unlike the creation of an internal combustion engine, the electric vehicles are still not a sufficiently attractive alternative to the traditional car. Apart from the fact that the new car models have significantly improved environmental performance such as low fuel consumption and reduced emissions, high cost and lack of infrastructure further reduce the possibility of switching to electric cars.
Although current data are not optimistic about the dependency of the economies on oil, there are several positive trends. The price of rechargeable batteries used in electric cars has declined 5 times over the past seven years, and battery capacity has increased. The future movements in this direction, however, might be hampered if the prices of lithium and cobalt, used in battery production, continue to increase.
The controversy is the state of mind about electric cars. Promoting electric cars, even if it improves urban living conditions, damages the countries in three main directions. On the one hand, taxes on electric cars are considerably lower, while at the same time the revenues in the budgets decrease due to the excise duty on fuels. On the other hand, state subsidies to buy electric cars are currently one of the main prerequisites for demand for electric cars in countries like the United States.
With this in mind, the future of electric cars and the world’s oil trade will still be decided, and key factors in defining it will play the state’s policies and debates on quality of life, particularly the cleanliness of the air in the big cities.