Electric cars and their impact on oil

At a time when some believe that the biggest threat to the future of oil is modern electric cars, all long-term expectations, even from organizations and bodies hostile to oil, indicate that the largest decrease in oil demand will come from the improvement in the efficiency of gasoline and diesel engines by converting them to energy. Alternative (electrical), and that this effect is two or three times the decrease resulting from the spread of cars

According to a study by the Center for Global Energy Policy at Columbia University in New York, while passenger car consumption accounts for about a quarter of global oil demand, this sector has received huge interest from governments and the media, given their perception that the rapid transition from passenger cars Conventional burning of petroleum products into an electric car is possible and necessary to reduce global warming and reduce oil consumption.

It is clear that the term “rapid transition” means in this regard: laws and regulations that have been legislated in China, the European Community, Britain and the state of California, which prohibit the sale of the traditional car by the year 2025, the late thirties, or the year 2050.

This rush to the electric car Some consider it an attempt by the concerned countries to implement the pledges of the “Paris Climate Agreement 2019” to limit the temperature rise by 2 degrees Celsius. Also, the acceleration in the legislation of the above laws reflects the competition between industrialized countries in progressing one over the other in the manufacture and marketing of electric cars.

The study acknowledges the difference in viewpoints between research and multiple expectations about the potential for “rapid transformation” to contribute to reducing oil demand and improving global warming, as expected.

The study concludes that car sales in general, including electric cars, depend on two main factors, namely the rate of population increase, and economic growth in a country from year to year. Without the growth of these two factors, car sales generally (conventional and electric) would decline.

The study showed clear disagreements about the predictions made by specialized institutions about the number of electric cars in the future, compared to the traditional car. Projections indicated in 2019 that the ratio of the number of electric cars to the total number of cars in the world by 2040 ranged between 10 and 70% of all cars, while studies and forecasts during 2018 estimated that the ratio of the number of electric cars to the total number of cars in the world in 2040 It will range between 15 and 50 percent. It is clear that these figures reflect two important differences: the first is from year to year, and the second is 

variations in expectations within one year.

On the other hand, the World Energy Agency announced that the number of electric cars on the world’s roads in 2019 amounted to about 3 million cars, an increase of 54 percent from 2019. China continued to be the largest market for electric cars in the world, accounting for half of the sales, or about 580,000 electric cars, in 2020, an increase of 72 percent from 2019. The United States ranked second, with sales of 280,000 electric cars in 2020, compared to about 160,000 electric cars in 2019.

Electric mobility doesn’t just include cars. The number of electric buses increased in 2020 to 370 thousand buses, compared to about 345 electric buses in 2016. It is worth noting that the New York Public Transportation Corporation, which is the largest public transportation corporation in the United States, currently uses electric buses only. The number of “electric motorcycles” reached 250 million in 2016. China’s market is the largest of its kind in the world. About 99 percent of buses and electric motorcycles are in China. There is a noticeable expansion in the markets of India and Europe.

Are electric cars threatening oil states

In the event that electric cars grow to a third of the market, crude oil consumption can be reduced by nine million barrels per day, which will affect the oil market.

Analysts at Barclays said that oil consumption may have a major impact in the coming years, as an increasing number of countries take steps to extract the internal combustion engine from their streets, due to its negative impact on the environment and society.

Barclays analysts said in a research note that the adoption of modern electric cars affects oil negatively and improves fuel efficiency. Electric cars represent a threat to oil countries, as it could reduce about 3.6 million barrels per day of demand for cars by 2026.

 This is roughly equivalent to the total production of the third largest producer in the Organization of Petroleum Exporting Countries (OPEC), Iran, which pumps about 3.8 million barrels per day, according to Reuters.

A strong jolt of oil

If electric cars account for a third of the auto market by 205 0, they could reduce oil demand by about 10 million barrels per day of demand, or about 91 percent of the daily production of Saudi Arabia. Global demand for oil will be 96.8 million barrels per day this year, according to OPEC expectations, which will affect the oil market and reduce oil exports due to the lack of use.

Countries with an electric vehicle plan

Barclays said that some of the most important global auto markets recently proposed banning or limiting the use of cars that burn fossil fuels and oil. It includes developed European countries such as France, Germsany and the United Kingdom, as well as higher growth markets China and India. California is also studying this due to the impact of oil combustion on the environment and society.

Is it possible to end the oil era?

Economists prefer to say that the best treatment for high prices is the high prices in the case of oil in recent years. This saying is often correct due to some recent studies.

High oil prices that lasted until 2019, when Brent crude futures traded above $ 100 a barrel, helped boost efficiency in industry and other energy sectors, but ultimately led to abundant supplies and lower prices, which affected the oil market negatively.

John Kilduff, co-founder, said that the era of high price oil has pushed us to innovate everywhere, especially with regard to oil shale, but also enabled oil operators to take much greater risks in view of the development of the modern electric car market.

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