Global oil demand will likely begin to stall within the next decade as electric vehicles become increasingly ubiquitous, according to Lipow Oil Associates President Andy Lipow.
“I think electric vehicles start making an impact in say, 2025, and beyond that,” he said on Thursday during an interview with FOX Business’ Maria Bartiromo.
That sentiment echoes a report released in June by the Carbon Tracker Initiative, an independent think tank studying the effect of energy transition on financial markets. The study found that demand for oil will have peaked by the late 2020s, with annual marginal growth in oil demand entirely offset by electric vehicles as soon as 2027.
Although it largely depends on the number of electric vehicles in use, Carbon Tracker estimated that about 1 million barrels per day could be displaced for each 60 million electric vehicles in 2030.
While Tesla grabs a share of the headlines for electric cars, the Chevrolet Bolt, Nissan’s Leaf and Hyundai’s Ioniq also have solid reviews from Edumunds.com as more automakers push the vehicles.
Lipow noted the effect on the oil industry will likely be small in the next five years as the technology behind electric vehicles continues to improve. In May, the International Energy Association estimated that the number of electric vehicles on the road in 2017 had risen to a record 3.1 million, with more than 1 million sold in that year alone.
“But in the shorter-term timeframe I still expect that oil demand worldwide is going to continue to grow, because the one thing it does have is ease of distribution around the world,” Lipow said.
The price of Brent oil, which measures the global market, is trading around $79 per barrel.