One hundred and twenty years ago the famous American 19th-century novelist and humorist, Samuel Clemens, better known by his pen name, Mark Twain, responded to speculation over his death with the immortal quip, “Reports of my death have been greatly exaggerated.”
So, it would seem with oil.
The rapid and incessant news of newer and greater technologies, coupled with commitments by governments from China to France to replace fossil burning vehicles with electronic vehicles, to seemingly endless improvements in battery life as well as automotive competitors readying to unveil an array of EV fleets from cars to trucks, leaves one with the impression that it’s game over for the internal combustion engine and – as a consequence – oil.
Though the future looks promising, the current and perhaps lasting reality is that global oil demand is, in fact, increasing to a near record levels with consumption now rising at 1.6 million barrels a day above last year or 25% higher than the 20-year average which normally sees growth of about 1.2 million barrels a day, according to the International Energy Agency (IEA). Indeed, this past June, oil consumption touched an all-time record of 100 million barrels a day, if only briefly. This, in turn, may give us a better understanding of why oil prices have risen at least moderately this past month, even while the U.S. increases exports of light oil prompted in part to the tightening supplies in the face of hitherto unforeseen demand scenarios.
Beyond the impact lower oil and fuel prices have had on global demand since oil’s collapse nearly three years ago, the economics of traditional industries like oil and automotive aren’t easily altered or as some commentators have suggested, “disrupted”. If there are 1.2 billion vehicles on the road today, 99% of which are run on fossil fuels, what will things look like in say 20 years when that number of vehicles is set to increase to 2 billion autos? While oil remains relatively cheap and plentiful, the same cannot be said for lithium, cobalt, copper and platinum, all essential to the EV boom many anticipate.
Bold predictions about peak oil, peak demand and the shift to new modes of powering our vehicles remains a more distant but not improbable transformation as the reality of economics continues to hold sway.